a) Critically discuss key factors that can influence the yield of a corporate bond.

b) By showing your calculations of Macaulay duration, justify which bond will be less sensitive to interest rate changes:

	Band A	Band B
Per value	1,000	1,000
Term to maturity	10 years	10 years
Annual coupon rate	5%	5%
Frequency of coupon payment per year	Once	Twice
Annual yield of bonds in similar risk class	3%	3%

(c) Critically discuss five ways in which banks and/or bondholders can manage the credit risk of the loans or bonds they hold as investment assets