1. A coupon bond that pays interest of $40 annually, has a par value of $1,000, matures in 5 years, and is selling today at a price of $840.29. The yield to maturity on this bond is __________.

A) 5% B) 6% C) 7% D) 8%

2. A callable bond pays annual interest of $60, has a par value of $1,000, matures in 20 years but is callable in 10 years at a price of $1,100, and has a value today of $1055.84. The yield to call on this bond is __________.

A) 6.00% B) 6.58% C) 7.20% D) 8.00%

3. A coupon bond pays semi-annual interest is reported as having a price quotation of 117% of its $1,000 par value. If the last interest payment was made 2 months ago and the coupon rate is 6%, the invoice price of the bond will be __________. (Assume 1 month = 30 days for this problem)

A) $1,140 B) $1,170 C) $1,180 D) $1,200

4. You purchased a 5-year annual interest coupon bond one year ago. Its coupon interest rate was 6% and its par value was $1,000. At the time you purchased the bond, the yield to maturity was 4%. If you sold the bond immediately after receiving the first interest payment and the bond's yield to maturity had changed to 3%, your annual total rate of return on holding the bond for that year would have been approximately_____.

A) 5.0% B) 5.5% C) 7.6% D) 9.0%

5. We observe that the slope of yield curve is negative (downward sloping). According to the pure expectations hypothesis of the term structure of interest rates, this is an indication that __________.

A) short term interest rate is expected to rise in the future B) long term interest rate is expected to rise in the future C) short term interest rate is expected to fall in the future D) long term interest rate is expected to fall in the future