1. Which of the following is true of bond prices:

a. Bond prices and interest rates are not connected

b. A fall in interest rates causes a fall in bond prices

c. A rise in interest rates causes bond prices to fall

d. A fall in bond prices causes interest rates to fall

2. Suppose a 5 year, $1,000 bond with annual coupons has a price of $901.93 and a yield to maturity of 6.3%. What is the bond's coupon rate?

3. Suppose that general motors acceptance corporation issued a bond with 10 years until maturity, a face value of $1,000, and a coupon rate of 7.7% (annual payments). The yield to maturity on this bond when it was issued was 6.3%. what was the price of this bond when it was issued?