1) A person paid $950 for a five year, $1,000, 9% bond.

Required:

1. a) Determine how much cash the bondholder will receive each year as interest.

2. b) Determine the amount of cash the bondholder will receive for his return on investment (950 paid)

   and the return of his investment for the $1,000 bond. Be sure to show your work.

3. c) Determine if the effective (market) interest rate is less than, equal to, or greater than

   12%.