Question: Question 1. Here are the details on 4 bonds. Current market rates are 5.5% for all 4 bonds.. Which bond would you buy and why?

Question 1. Here are the details on 4 bonds. Current market rates are 5.5% for all 4 bonds.. Which bond would you buy and why? (3 marks) Hints: Current price is the Ask; Show your calculations (7 marks)!

Bond A ABC Inc. 6% 10 Year Annual Pay Current Price $1,045.69

Bond B DEF Ltd. 4% 15 Year Quarterly Pay Current Price $ 850.47

Bond C MLM Inc. 5.5% 6 Year Semi Annual Pay Current Price $ 998.40

Bond D TJB Ltd. 5.5% 10 Year Annual Pay Current Price $1,000.00

Question 2 (5 marks):

	2019	2020

Inflation	122.00	126.50
GDP	1973.40	2039.20
Unemployment Rate	6.90	6.30
Exchange Vs $US	1.01	0.97

Given the above information (Next page):

A Calculate the inflation rate for 2020. Is this inside the range desired by the Bank of Canada? Why or why not? (3 marks)

B Based on your answer above, what action is the Bank of Canada likely to take? (1 mark)

C Based on the information above, what are your expectations for interest rates? Based on those expectations, if you are a bond speculator, what type of bonds should you be buying or selling? (1 mark)

Question 3 (5 marks):

Explain the role of the Gatekeeper in Anti-money Laundering (AML 2.5 marks)). Link this role to the IIROC Know your client requirements (2.5 marks)

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