1. A bond with a par value of $1000 pays interest of $60 annually. It matures in 5 years, and is selling today at a $77.50 discount from par value.

a.Price of the bond today = $

b.The current yield on this bond is _________%.

2. You buy a Treasury Inflation Protected Security (TIPS) at issue at par for $1,000. The bond has a 4.2% coupon.

a)If inflation after a year turns out to be 2.0%, your annual coupon income = $_________

b)If the following year, inflation rises again to 4.0%, your annual coupon income received in year 2 = $ ___

c)What is the nominal rate of return on the TIPS bond in the first year?

3. A bond with a $1000 par value has an ask price of 110% ofits face value. It makes semiannual coupon payments. The coupon rate is 6%.If the last interest payment was made 2 months ago, the invoice price of the bond will be $_________