Question: QUESTION 3: (Total 15 marks) a. Kim bought a $1200 face value bond, which has a 3% coupon rate. Its current price is $900 and

QUESTION 3: (Total 15 marks) a. Kim bought a $1200 face value bond, which has a 3% coupon rate. Its current price is $900 and its price is expected to increase to $1050 next year. Calculate the Expected yield, the expected rate of capital gain and the expected rate of return. (6 marks) I). What is the yield to maturity of a simple loan for $3 million that requires a repayment of $5 million in 2 years time? (4 marks} c. Explain double coincidence of wants and the cost that arises as a result of it? (5 marks) QUESTION 4: (Total 15 marks) 3. Draw and explain how an increase required reserve ratio effect the federal funds rate. (5 marks) b. \"A country is always better off when its currency increases in value.\" Is this statement true, false or uncertain. Explain your answer. (5 marks) c. When the Federal Reserve conducts an expansionary monetary policy, what happens to the moneyppiy? How does this affect the My of dollar assets and the exchange w

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