Question: 2. BB Company has two different bonds currently outstanding. Bond A with a 8% coupon rate and annual coupon has a face value of $1000,

2. BB Company has two different bonds currently outstanding. Bond A with a 8% coupon rate and annual coupon has a face value of $1000, 3 years to maturity. Bond B has a face value of $800 but mature in 5 years, and the bond pays $60 each year. Currently, the market prices of bond A and bond B are S 1020 and $ 860, respectively Required 1)If the return rate on similar-risk bonds is 6%, which bond is worth to be invested? why?(10 marks) 2) In the future, if the interest rate is expected to drop, which one has more interest rate risk? Why?(10 marks) (20 marks)

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