A5-year government bond with a face value of £100 makes annual coupon payments of 6 per cent and offers a yield to maturity of 4 per cent compounded annually. Suppose that one year later bond yields...

Extracted text: A5-year government bond with a face value of £100 makes annual coupon payments of 6 per cent and offers a yield to maturity of 4 per cent compounded annually. Suppose that one year later bond yields for bonds of this risk class have fallen to 3 per cent. What is (0 the price of the bond in one year (to the nearest £0.01) and (ii) the rate of return (to the nearest 0.0196) which the bondholder has eamed over the 12-month period from today to one year from now? Select an answer and submit. For keyboard navigation, use the up/down arrow kepto select an answer. a )E108.90 and (ii) 7.57% ) E111.15 and (ii) 4.00% )E111.15 and (ii) 7.579% None of the above e ) E108.90 and (ii) 4.00%