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a) A company XYZ decides to issue a 90-day commercial paper to raise a total fund of $300000. If the yield of this is 5% p.a. how much would the company pay back to the holder on the maturity date of the security? (Use Money market formula) b) XYZ company also issue 15 year bond, face value $1000, coupon payment $45, every six months. The market yield to maturity of similar bond at issuance is 14%p. a. Use the bond pricing theories, identify and explain the selling price of the bond at maturity. (Homework :week 7, Q3) c) 1,5 year later the bond were issued. The RBA increase the cash rate by 0.75%. Holding other factors constant, which price below would be the most likely bond price in the secondary market for the bond that were issued? Explain briefly without calculation. Pb=960Pb=1000Pb=1200 (If interest rate increase price will be increased) d) Assume investor purchased a bond at issuance at the price you identified in part b) and sold it the price you got in part c) after holding the bond for 1.5 years. Draw a timeline and set out each cash flow that he paid and received from his investment in the bond and calculate the holding period yield par annum he earned on this investment. a) A company XYZ decides to issue a 90-day commercial paper to raise a total fund of $300000. If the yield of this is 5% p.a. how much would the company pay back to the holder on the maturity date of the security? (Use Money market formula) b) XYZ company also issue 15 year bond, face value $1000, coupon payment $45, every six months. The market yield to maturity of similar bond at issuance is 14%p. a. Use the bond pricing theories, identify and explain the selling price of the bond at maturity. (Homework :week 7, Q3) c) 1,5 year later the bond were issued. The RBA increase the cash rate by 0.75%. Holding other factors constant, which price below would be the most likely bond price in the secondary market for the bond that were issued? Explain briefly without calculation. Pb=960Pb=1000Pb=1200 (If interest rate increase price will be increased) d) Assume investor purchased a bond at issuance at the price you identified in part b) and sold it the price you got in part c) after holding the bond for 1.5 years. Draw a timeline and set out each cash flow that he paid and received from his investment in the bond and calculate the holding period yield par annum he earned on this investment

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