1.Suppose that you invest in a discount bond that pays off a face value of Ksh.120,000 after one year. Its current purchase price is Ksh.105,000. Calculate the bonds yield to maturity(5 Marks)

2.Consider a security that pays you the following stream of cash flows:

Year

1

2

3

4

5

Cash flow (US$)

11,000

12,500

13,500

14,200

15,000

Given that the rate of interest is 12%, calculate the present value of the security(5 Marks)

3.Calculate the yield to maturity on a simple loan of Khs. 5 million that requires a repayment of Ksh. 8 million in five years time(5 Marks)

4.Discuss four factors that determine the supply of bonds in a typical security market(10 Marks)