Bond Valuation (4 marks) A 10-year corporate bond was issued on 24/08/2018, with face value of $1000, paying coupon semi-annually at the coupon rate of 9%

Problem 1: Bond Valuation (4 marks) A 10-year corporate bond was issued on 24/08/2018, with face value of $1000, paying coupon semi-annually at the coupon rate of 9%. The yield to maturity at issue date was 8.16%. The yield to maturity on 24/02/2025 is 10.25%. a) Compute the bond price at issue date (1 mark). b) Compute the bond price on 24/02/2025 (2 marks). c) Compute total return rate (ignore the time value of money) if you purchased the bond at issue date and sold it on 24/02/2025. From the total return rate, compute the rate of return per period. Is it a good decision? (1 mark) Problem 2: Bank Saving Account (2 marks) A bank quotes a 2-month saving account at an APR of 6% and a 6-month saving account at an APR of 6.05%. If you want to save your money in 6 months, which saving account would you choose and why? Problem 3: Mortgage (4 marks) You borrow $50,000 in the bank in a mortgage contract to buy a house. The contract requires you to pay a fixed installment per month for 30 years at an APR of 9%. a) How much is the fixed installment? (2 marks) b) At the end of year 20 (after 240 months), if you want to pay the full mortgage at this time (instead of paying the installment for another 10 years), how much do you have to pay (assuming that there is no penalty for paying early)? (2 marks)