Question 6 [20 marks] Required: Answer questions (a) and (b) below. a) [10 marks] Which of the following statements is correct? Choose Only one. i) A nominal interest rate we observe contains the effect of inflation and therefore is typically lower than a real interest rate. ii) Bonds with a rating of \"B" or higher are considered an investment grade. iii) As the interest rate declines, a bond becomes worth less because the present value of the band's remaining cash flows declines. iv) A downwardwsloping term structure of interest rates is resulted when the expected decline in the inflation is large en0ugh to offset the interest rate risk premium v) None of the above. Answer: b) [10 marks] Complete each of the following statements. i) Bonds are often issued with a provision, which is the option to repay debt at a specified price prior to maturity. ii) The invoice price, or full price, of a bond is inclusive of accrued interests and is often referred to as a iii) If a bond has a coupon rate equal to its yield to maturity and has a face value of $1,000, the bond price should be equal to Answer to part (i) Answer to part (ii) Answer to part (iii)