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Question 1 (20 points) Suppose there are two bonds you are considering: Bond A 16...

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Question 1 (20 points) Suppose there are two bonds you are considering: Bond A 16 Bond B 20 Maturity (years) Annual Coupon rate (%) Par Value 5 2 1000 1000 a. If both bonds had a required rate of return of 4%, what would the bonds' prices be? b. Re-calculate the prices of the bonds if the required return falls to 2%. Could you explain why the price increases or decreases given this change in required return? Question 2 (20 points) Calculate the NAV (Net asset value) of the following fund, assuming 200 shares are outstanding. Calculate the percentage change in the NAV of the fund if stock C climbs to $52. Stock A B Shares owned 1,500 4,000 2,000 na price $6.75 $45.30 $32.04 $3,508 Cash a) Will the NAV increase or decrease? Why? b) Calculated your return on your investment given the change in NAV

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