1. A 25-year maturity mortgage-backed bond is issued. The bond has a par value of $20,000 and promises to pay an 8 percent annual coupon. At issue, bond market investors require a 12 percent interest rate on the bond. Assume that 20 years after the bond is issued, bond market investors require a 15 percent interest rate on the bond. What is the market price of the bond?

$15,686

$16,856

$17,655

$15,307

2.

The Real Estate Investment Trust Act authorizes:

REITs are subject to double taxation in exchange for limited liability

REITs are exempt from double taxation as long as certain conditions are met

REITs are considered a form of limited partnership

REITs are exempt from federal securities laws