[2 marks] c. Two bonds (A and B) have the following features Bond Maturity Coupon Rate Price (GH) (Years) (%) Yield to Maturity (YTM) (%) Bond A 10 10 1,352.2 5.359 Bond B 10 5 964.3 5.473 These two bonds have a GH1,000 face value and an annual coupon frequency i. An investor buys these two bonds and holds them until maturity. Compute the annual return rate over the period, supposing that the yield curve becomes instantaneously flat at a 5.4% level and remains stable at this level during 10 years. [3 Marks] ii. What is the interest rate level such that these two bonds pros return rate? In this case, what is the annual return rate of the two bonds? [2 marks] d. If yield curves, on average, were flat, what would this say about the liquidity premiums in the term structure? Would you be more or less willing to accept the pure expectations theory? Explain. [5 Marks] [2 marks] c. Two bonds (A and B) have the following features Bond Maturity Coupon Rate Price (GH) (Years) (%) Yield to Maturity (YTM) (%) Bond A 10 10 1,352.2 5.359 Bond B 10 5 964.3 5.473 These two bonds have a GH1,000 face value and an annual coupon frequency i. An investor buys these two bonds and holds them until maturity. Compute the annual return rate over the period, supposing that the yield curve becomes instantaneously flat at a 5.4% level and remains stable at this level during 10 years. [3 Marks] ii. What is the interest rate level such that these two bonds pros return rate? In this case, what is the annual return rate of the two bonds? [2 marks] d. If yield curves, on average, were flat, what would this say about the liquidity premiums in the term structure? Would you be more or less willing to accept the pure expectations theory? Explain. [5 Marks]