QUESTION 4 (14 marks] Peter bought a 3-year 15% Treasury bond on 15 June 2019 at a yield of j2 = 18.6% p.a. Coupons can be reinvested at j2 = 14.0% p.a. The bond will be redeemed at par on the maturity date (face value $100). a. [2 marks] Calculate the total accumulated value at maturity generated by this bond if Peter holds it to maturity and reinvests all coupon payments received at the available rate. b. [2 marks] Calculate the total realised compound yield (TRCY) of this bond. [2 marks] Decompose the total accumulated value generated by this bond into: original purchase price, coupons, interest on coupons, and capital gain/loss. d. [2 marks If Peter holds the bond for 2 years and sells it for a yield of j2 = 18.8% p.a., calculate the holding period yield (HPY). e. [2 marks] Calculate duration of this bond if it is held to maturity. f. [2 marksUse the concept of modified duration to estimate the price of the bond if the yield to maturity increases to j2 = 18.7% p.a. immedi- ately after Peter buys the bond. g. [2 marks] What fixed liability could Peter be reasonably confident of paying off in 21/2 years' time? Why? QUESTION 4 (14 marks] Peter bought a 3-year 15% Treasury bond on 15 June 2019 at a yield of j2 = 18.6% p.a. Coupons can be reinvested at j2 = 14.0% p.a. The bond will be redeemed at par on the maturity date (face value $100). a. [2 marks] Calculate the total accumulated value at maturity generated by this bond if Peter holds it to maturity and reinvests all coupon payments received at the available rate. b. [2 marks] Calculate the total realised compound yield (TRCY) of this bond. [2 marks] Decompose the total accumulated value generated by this bond into: original purchase price, coupons, interest on coupons, and capital gain/loss. d. [2 marks If Peter holds the bond for 2 years and sells it for a yield of j2 = 18.8% p.a., calculate the holding period yield (HPY). e. [2 marks] Calculate duration of this bond if it is held to maturity. f. [2 marksUse the concept of modified duration to estimate the price of the bond if the yield to maturity increases to j2 = 18.7% p.a. immedi- ately after Peter buys the bond. g. [2 marks] What fixed liability could Peter be reasonably confident of paying off in 21/2 years' time? Why