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a) Value the following three bonds and describe whether the bonds selling at Par value, at a discount or at a premium:
i. A four year zero coupon bond, with a par value of 200. (3 marks)
ii. A four year corporate bond, with a coupon rate of 6% and a face value of 500 (coupons are paid annually). (5 marks)
iii. A five year UK gilt, with a coupon rate of 4% and a face value of 100 (coupons are paid semi-annually). (5 marks)
The yield to maturity on the zero coupon bond is 5%, on the four year corporate bond is 9% and for the five year UK gilt, it is 10%.
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