1. DEF Ltd's bonds are selling today at a $59.80 discount based on a face value of $1,000. They have a 3.60% coupon rate, pay semi-annual coupons and will mature in 10 years. If DEF were to issue similar bonds today, what will be its coupon rate if they are sold at par and mature in 10 years?

2. You just purchased a $1,000 par value, 5-year bond with a coupon rate of 6.40% (paid annually) that has a yield to maturity of 5.40%. If you sell this bond in 2 years for $1,050, what would be your effective annual rate of return, if coupon payments are reinvested at a 4.00% annual interest rate?