Short Answer (12 points). Show your work to receive full eredit. 1. (6 points) A 3 annually. The bond 0 year maturity corporate bond has a 8% coupon rate with coupons paid currently sells for S875.50. A bond market analyst forecasts that in 8 ears, yields on such bonds will be at 10%. You believe you will be able to reinvest the coupons earned over the next 8 years at a 5% rate of return. What is your expected annual compound rate of return if you plan on selling the bond in 8 years? (6 points) To create a portfolio with a duration of 4 years using a 5-year zero-coupon bond and a 2-year 6% annual coupon bond with a yield to maturity of 8%, one would have to invest to invest fthe porfolio value in the zero-coupon bond. Short Answer (12 points). Show your work to receive full eredit. 1. (6 points) A 3 annually. The bond 0 year maturity corporate bond has a 8% coupon rate with coupons paid currently sells for S875.50. A bond market analyst forecasts that in 8 ears, yields on such bonds will be at 10%. You believe you will be able to reinvest the coupons earned over the next 8 years at a 5% rate of return. What is your expected annual compound rate of return if you plan on selling the bond in 8 years? (6 points) To create a portfolio with a duration of 4 years using a 5-year zero-coupon bond and a 2-year 6% annual coupon bond with a yield to maturity of 8%, one would have to invest to invest fthe porfolio value in the zero-coupon bond