FREE RESPONSE: Please write your final answer to each part in the space provided. SHOW YOUR WORK wherever you like, but make sure it is clearly labeled and legible. 5 points for each answer unless otherwise noted. 8. Consider two bonds with identical face value of $100 that pay annual coupons. You have the following information: Bond A B Coupon Rate 3.0% 6.0% Maturity 5 years 15 years YTM 5.0% 6.0% a) Compute the price of bonds A and B Suppose that you have $100,000 that you invest in bonds today. One year later, bond A trades for $95, and bond B trades for $105. b) Compute your annualized HPR if you invested everything in A. Compute your annualized HPR if you invested everything in B. c) Compute your annualized HPR if you invested 40% of the $100,000 in bond A, and 60% in bond B. Assume you can buy or sell fractions of a bond, if necessary