Question No 2:G Company has two bond issues outstanding. Both bonds pay $100 annual interest plus $1,000 at maturity. Bond A has a maturity of 15 years, and Bond B has a maturity of 1 year. (4 Marks)a. What will be the value of each of these bonds when the going rate of interest is:(1) 5%, (2) 8%, and (3) 12%? Assume that there is only one more interest payment to be made on Bond B.b. Why does the longer-term (15-year) bond fluctuate more when interest rates change than does the shorter-term bond (1 year)?
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