1. Assume that you are considering the purchase of a 25-year, noncallable bond with an annual coupon rate of 8.9%. The bond has a face value of $1,000, and it makes semiannual interest payments. If you require a 9.6% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?

2. A mutual fund manager has a $34.00 million portfolio with a beta of 1.10. The risk-free rate is 4.25%, and the market risk premium is 7.00%. The manager expects to receive an additional $16.00 million which she plans to invest in additional stocks. After investing the additional funds, she wants the fund's required and expected return to be 13.00%. What must the average beta of the new stocks be to achieve the target required rate of return? Do not round your intermediate calculations.