1.Suppose you are faced with the following spot rates:

y₁ = 9%

_y2 = 10%

_y3 = 11%

Now consider a bond with a $100 face value maturing in 3 years. The bond pays annual coupon payments at a 6% coupon rate. What is the bond price?

Select one:

a. $92.63

b. $87.97

c. $80.86

d. $85.49

e. $100

2.A bond will sell at a discount when

Select one:

a. the coupon rate is greater than the current yield, and the current yield is greater than yield to maturity.

b. the coupon rate is greater than yield to maturity.

c. the coupon rate is less than the current yield, and the current yield is greater than the yield to maturity.

d. the coupon rate is less than the current yield, and the current yield is less than yield to maturity.

e. None of the options are true.