Question One Most companies consider duration to be a useful factor when deciding whether to invest in corporate bonds. However, other companies may not consider duration to be that useful and as such, they may rely on the work of credit rating agencies. Information provided by credit rating agencies may be more useful that duration when choosing the bonds to invest in. Required: Prepare a 2,500 word evaluative report that covers the following: (a) A discussion of the components of credit risk and the relationship between credit risk and interest rate risk. [10 marks] (b) Explanation of any two (2) approaches that may be used to assess the degree of credit risk of a proposed bond issue. [15 marks] (c) A critical discussion of the usefulness of duration as a measure of interest rate risk relating to corporate bonds. [15 marks] (d) An evaluation whether there is a relationship between using duration and credit ratings when choosing bonds that an investor should invest in. [10 marks]