5. The government in the U.S. issues zero-coupon bonds up to one year maturity, but STRIPS are "manufactured" zero- coupon bonds with maturities up to 30 years. So, for example, a financial institution could first buy 400 30-year coupon bonds issued by the government that each pay $2.50 of coupon every six months. The institution could then sell the combined coupons totaling $1,000 as a separate zero-coupon bond for each maturity ranging from 6 months up to 30 years. This is a financial innovation that occurred decades ago in the face of volatile inflation and an increased demand for long-term zero coupon government bonds. Given this information, analyze the following statement. "The yield to maturity (YTM) of a long-term STRIP will typically be higher than that of a short-term STRIP." True statement False statement 6. Suppose Wolverine Steel Company wishes to issue a $100,000 bond with a maturity of 4 years to raise $78,101. The market requires a yield to maturity (YTM) of 11.0% for this company's borrowing/debt. How much coupon will the company have to pay every six months? (Enter just the number in dollars without the $ sign or a comma and round off decimals to the closest integer, i.e., rounding $30.49 down to $30 and rounding $30.50 up to $31.) Enter answer here 1. A pure discount (or zero-coupon) government bond is issued today that promises to pay $15,000 in 15 years. If the current interest rate on similar bonds is 7%, what is the price of the bond? Recall that the compounding interval for bonds is 6 months. $5,344.18 $1,970.51 $2,348.34 $8,953.36 2. For two otherwise identical coupon bonds, the one with the higher rating will have a higher price. True statement False statement 3. Coupon bonds are selling below par when the yield to maturity is higher than the coupon rate. True statement False statement 4. What is the yield to maturity (YTM) of a zero coupon bond with a face value of $1,000, current price of $800 and maturity of 7 years? Recall that the compounding interval is 6 months and the YTM, like all interest rates, is reported on an annualized basis. (Allow two decimals in the percentage but do not enter the % sign.) Enter answer here