Exercise 3.4.1. (a) Consider an annuity that pays 1 every quarter for M years. In other words, the payment times are T-1+1+ 2, . . . , t + 4 Show that the value at present time t is T4/4 assuming the quarterly compounded interest rate has constant value ra b) Consider a fixed rate bond with notional N and coupon c that starts now, matures M years from now, and has quarterly coupon payments. Show that the value at present time t IS -4M 4/4 assuming the quarterly compounded interest rate has constant value r