Suppose your investment horizon is 9 years. You purchased 1 Bond D and E.

a) What is your annualized return (in %) at the end of year 9, assuming flat yield curve and semi-annual coupon payments?

b) Suppose interest rate increased by 25 bp immediately after you purchased Bond D. What is your annualized return (in %) at the end of year 9, assuming flat yield curve and semi-annual coupon payments?

c) Suppose interest rate decreased by 25 bp immediately after you purchased Bond D. What is your annualized return (in %) at the end of year 9, assuming flat yield curve and semi-annual compounding?

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