Question 2 (this question has three parts, a) b) and c)) (22 marks) Part a. "Debt finance is considered to be a solution to encourage managers to distribute excess cash to investors rather than investing in sub-optimal projects. Do you agree with this statement? Explain your answer. (6 marks) Part b. Consider a 3-year bond with 13 percent semi-annual coupon payments and currently priced to yield 12 per cent per annum. i. Calculate duration of the bond. ii. What is the percentage of price change if interest rate increases to 12.35% per annum? (7+3=10 marks) Part c. Suppose the yield curve is descending or downward sloping yield curve. What does it say about the future outlook of the economy and in what type of bonds investors should invest in? (6 marks)