(10 points) Circle all of the following statements that are correct about bonds.

1. Bonds with higher coupons have larger price changes given a change in interest rates.

2. Bonds with longer maturities have larger price changes given a change in interest rates.

3. The price of a bond equals the present value of the principal repayment and the present value

4. The yield to maturity assumes that intermediate cashflows are reinvested a market interest rate and this cannot change

5. Bond prices have an inverse relationship with interest rates.

6. Bond prices can never be above $1000.

7. Bond prices can never vary because they are based on binding contract between lenders and borrowers.

8. The yield to maturity includes a current yield and a capital gains yield

9. Municipal bonds have higher pre-tax returns as compared to corporate bonds.