Question: Please present all final answers to two decimals for number (e.g. 1.23) and two decimals for percent FULL working must be presented (with formulas, working

Please present all final answers to two decimals for number (e.g. 1.23) and two decimals for percent

FULL working must be presented (with formulas, working stages, and results with units). Please present all final answers to two decimals for number (e.g. 1.23)(e.g. 1.23%)

Question 1 (20 marks): Assume a corporate bond has a face value of $1,000 and mature in eight years. The bonds pay 5% interest in the first four years and 7% thereafter. Interest is paid semi-annually. Suppose you buy the bond for $900 and hold it to maturity. a. What is your return on this bond? (12 marks) b. If your required rate of return is 7%, discuss whether you should invest in the bond and why or why not. (8 marks) (Show ALL workings)

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