1. Jacks Surf Shop is preparing a new bond offering with a 7percent, semi-annual coupon and a par value of $1,000. The bonds will be repaid in 10 years and will initially be sold at par. Given this, which one of the following statements is correct? A. The final payment will be in the amount of $1,035 B. The bonds will pay 10 interest payments of $70 each C. The bonds will sell at a premium if the market rate of interestbecomes 7.5 percent

D. The bonds will initially sell for $1,035 each

E. The bonds will become discount bonds if the market rate of interest decreases

2. Big Sur Markets bond has a market price of $1,181.0222 and matures in 9.5 years. The bond pays interest semiannually. What is the annual coupon rate for the bond if the face value is $1,000 and the yield to maturity is 6.20 percent? A. 4.38% B. 6.47%

C. 8.75% D. 9.50% E. 10.75%

3. Which of the following statements is CORRECT? A. All else equal, short-term bonds have less reinvestment risk than long-term bonds

B. All else equal, low-coupon bonds have less price risk than high-coupon bonds

C. All else equal, short-term bonds have more price risk than long-term bonds

D. All else equal, high-coupon bonds have less price risk than low-coupon bonds

E. All else equal, long-term bonds have more reinvestment risk than short-term bonds

4. Zlatan Inc. bonds are currently selling for $1,180 and have a par value of $1,000. They pay a $85 annual coupon and have a 15-year maturity, but they also have 5 years of call protection, along with a 8% call premium. What is Zlatans yield to call (YTC)?

A. 5.69 percent

B. 6.55 percent

C. 7.74 percent

D. 9.01 percent

E. 10.56 percent