1) A bond has a face value of $1,000, has 5 years until maturity, and an annual coupon rate of 7%? It yields 5% currently. By how much will the price change over the next year if the yield remains constant?

a) rise by $15.67

b)decline by 15.67

c) decline by 86.59

d) zero.

2) A cars price is currently $20,000 and is expected to rise by 4% a year. If the interest rate is 6%, how much do you need to put aside today to buy the car one year from now?

	a) $18,182
	b) $19,231
	c) $19,263
	d) $14,085