Question: 4. a. What is unit trust? Differ between defined contribution and defined benefit plan. b. Find out the effects of maturity, coupon rate, and level

4. a. What is unit trust? Differ between defined contribution and defined benefit plan. b. Find out the effects of maturity, coupon rate, and level of yields on price sensitivity of any financial asset. c. Suppose, you have been considering a coupon bond, which pays 6 % annual interest, with principal amount of Tk. 1000 for the period of three years. Furthermore, assume that the real rate is 2.5%, the inflation premium is 3%, the default risk premium is 2%, the maturity premium is 0.5%, and the liquidity premium is 1%. Since the foreign-exchange rate premium is zero. i. What would be the required rate of return (i.e. discount rate) against the bond? Find out the price of the bond by using the calculated discount rate? ii. What is the duration of the bond, assuming that the initial price is one you calculated under part (i) and the new prices are for the changes in yield by the 130 basis point?

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