Question: SECTION A You must answer ONE question from this section. A1. The following table provides information about two corporate bonds. Coupon (semi-annual payment) Maturity in

SECTION A You must answer ONE question from this section. A1. The following table provides information about two corporate bonds. Coupon (semi-annual payment) Maturity in years Principle Price Bond A 6% 4 100 ? Bond B 8% 1 100 102 (a) Determine the yield to maturity of Bond B. [20 marks] (b) Calculate the fair price of bond A if you know that the annual market-based rate equals 8%. [10 marks] (c) Calculate the duration of bond A. [10 marks) (d) What are the differences between ordinary and preference shares? [5 marks) (e) What is the return on equity of a firm? Why is it important for the manager of a firm? [5 marks)

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