1. If you now buy one share of a 2-years 9% coupon bond with a face value of $1,000, and the interest rate of 7%, what is the bond price you have to pay now (at year zero)?

a.$1036.16

b.$1,000.00

c.$1,036.97

d.$1,063.16

e.None of the above

2.

What happens to the price of a two-year bond with an 8% coupon when interest rates change from 7% to 8%?

a.A price increase of $26.24

b.A price decrease of $26.24

c.A price decrease of $18.08

d.A price increase of $18.08

e.None of the above

3.

If you now buy one share of a 3-years 9% coupon bond with a face value of $1,000, and the interest rate of 10%, what is the cash flow you will receive in year 3?

a.$90.00

b.$100.00

c.$1,090.00

d.$1,100.00

e.None of the above