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16. What is the value of a 7% semi-annual coupon bond that matures in 8 years if rates move to 6.5 a. 1030.81 b. 1000 c.1030.44 17. If I buy a bond for 1100 and it pays a 5% coupon paid semiannually and matures in 10 years what is the YTM? a. 5% b.4% c. 3.78% d.3.79% 18. What should I buy if the Fed is raising rates due to a strong economy and the government is cutting taxes? a. Treasury Bonds b. Medium term higher yield corporate bonds c. Longer term Municipal bonds d. 20 yr below investment grade bonds 19. T/F General obligation muni bonds are backed by the full faith and credit of the issuing state 20. T/F T-notes have no credit risk and corporate bonds must have a credit spread over the T notes to compensate for risk. T notes and corporate bonds both have interest rate risk measured by duration 21. T/F reinvestment rate risk in bonds pertains to the risk that the principal balance will be reinvested at lower rates. 22. T/F Duration is a good measure of interest rate risk. If a bond has a duration of 5, then that bond should go up 5% if rates go up 1% 23. T/F The YTM is the total return or compounded annual rate of return you achieve from buying a bond and holding it until maturity