(Solved): (a) What is market risk? Calculate the fall in value in a \( \$ 8 \) million parcel of 60 -day mone ...

(a) What is market risk? Calculate the fall in value in a \( \$ 8 \) million parcel of 60 -day money market securities when the money market yield rises unexpectedly from \( 5.6 \% \) to \( 5.85 \% \). [10 marks] (b) The Austrizalian Government has issued some \( 12 \% \) Treasury bonds with a maturity of five years and a face value of \( \$ \mathbf{1 0 0} \). If an investor's required rate of return is \( 9 \% \) p.a., what price would the investor be willing to pay for these bonds assuming coupons are paid semi-annually?