1. In the context of bonds, explain the following concepts:

1.a zeros

2. a floater

3. a Yankee bond

4. a Eurodollar bond

3. Which of the following corporate bond provisions is valuable to the issuing firm? Why?

Convertible bond

Puttable bond

Callable bond

4. Consider a bond with a settlement date (date of purchase) of 9/15/2020, and a maturity date of 12/15/2026. The coupon rate is 6% and coupons are paid semiannually. The par is $1000. If the bond's price is quote as 98.5 on the settlement day, what will be the invoice price of the bond at the time? Use 30 days for all the months in your calculation.

Round your answer to the nearest $0.1, i.e., one decimal place.

5. As a bond investor, you regularly evaluate the trend of interest rates in the market and you expect interest rates to rise in the next few months. Given such belief, would you choose to purchase a floater bond or an inverse floater? Why?

6. Income from which of the following securities is tax-free?

Group of answer choices

municipal bonds

treasury bonds

prefer stocks

corporate bonds

8. Enter a response for each of the following questions:

How Callable bond price behaves differently from straight bonds?

How does Realized Compound Return differ from YTM?

9. Suppose a 7% coupon, $1000 par, 20-year bond is selling at $1025.58. Coupons are paid semiannually. What is the bonds YTM?

10.

Consider a three-year 8% coupon bond selling at par value, annual coupon. If the investor of the bond holds the bond till maturity and manages to invest all the coupons at 9% after receiving them, what is the Realized Compound Return for their 3-year investment?

11. Suppose you buy a 25-year, 5% (annual payment) coupon bond for $1000 (i.e., the bond is selling at par) and you plan to hold it for 18 years. You forecast that the bonds yield to maturity will be 7% when it is sold and that the reinvestment rate on the coupons will be 5%. What will be your annualized compound return over your investment horizon?