1

(i)Assume you have a bond with a 5% semiannual-pay and a face value of $1,000. This bond will mature in 6 years. If the yield is 7%, what is the price of this bond?

Select one:

a. $1,000.00

b. $903.37

c. $1,005.37

d. $878.86

(ii)

You would like to buy yourself a trailer so that you can enjoy camping this summer. The trailer cost $46,000. You have $37,000 which is not enough for the model you would like to buy. A friend of you, who just passed a financial management course, gave you a great idea to invest today in a financial instrument that pays 8%. How much money you need to invest today so that you can buy a trailer in 3 years.

Select one:

a. $35,889,45

b. $35,122.33

c. $36,516.28

d. $37,000.00

Clear my choice

(iii)

Assume you have a bond with a coupon rate of 12% and coupons paid annually. The par value is $1,000 and the bond has 4 years to maturity. The yield to maturity is 10%. What is the value of a bond?

Select one:

a. $1,550.10

b. $975.24

c. $1,296.89

d. $1,063.40