1. Consider a bond paying a coupon rate of 8% per year semiannually when the market interest rate is only 5%. The bond has twenty years until maturity. a. Find the bonds price today. b. Find the bonds price six months from now after the next coupon is paid if the interest rate rises to 7%. c. What is the total rate of return on the bond?

2.You find a certain stock that had returns of 14 percent, -27 percent, 19 percent, and 21 percent for four of the last five years, respectively. What is the average return of the stock over this period? What is the standard deviation of the stock's returns?

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