6. You are a bond manager, looking for arbitrage opportunity in a 2-year 8% annual payment treasury coupon bond trading at $998 today. Suppose, you also observe the following data for today's mar et: 2-year treasury spot rate 8.465% 1-year pure discount treasury bond trading at $950 Is there arbitrage opportunity? What should you buy and sell? A. No, all bonds are fairly priced B. Yes, there is arbitrage profit to make. Buy the package of STRIPS and sell the treasury coupon bond. C. Yes, $4 arbitrage profit to make. Buy the coupon bond and sell the package of STRIPS. D. depends on YTM 7. One year ago, Alpha Supply issued 15-year bonds at par. The bonds have a coupon rate of 6.5 percent and pay interest annually. Today, the market rate of interest on these bonds is 7.2 percent. How does the price of these bonds today compare to the issue price? A. Increase. B. decrease. C. remains unchanged. D. not enough information to determine 8. A $1,000 face value bond currently has a yield to maturity of 6.69 percent. The bond matures in three years and pays interest annually. The coupon rate is 7 percent. What is the current price of this bond? A. $949.60 B. $1,005.26 C. $1,008.18 D. $1,010.13 9. An investor purchases the bonds of JLD Corp., which pay an annual coupon of 10% and mature in 10 years, at an annual yield to maturity of 12%. The bonds will most likely be selling at: 6. You are a bond manager, looking for arbitrage opportunity in a 2-year 8% annual payment treasury coupon bond trading at $998 today. Suppose, you also observe the following data for today's mar et: 2-year treasury spot rate 8.465% 1-year pure discount treasury bond trading at $950 Is there arbitrage opportunity? What should you buy and sell? A. No, all bonds are fairly priced B. Yes, there is arbitrage profit to make. Buy the package of STRIPS and sell the treasury coupon bond. C. Yes, $4 arbitrage profit to make. Buy the coupon bond and sell the package of STRIPS. D. depends on YTM 7. One year ago, Alpha Supply issued 15-year bonds at par. The bonds have a coupon rate of 6.5 percent and pay interest annually. Today, the market rate of interest on these bonds is 7.2 percent. How does the price of these bonds today compare to the issue price? A. Increase. B. decrease. C. remains unchanged. D. not enough information to determine 8. A $1,000 face value bond currently has a yield to maturity of 6.69 percent. The bond matures in three years and pays interest annually. The coupon rate is 7 percent. What is the current price of this bond? A. $949.60 B. $1,005.26 C. $1,008.18 D. $1,010.13 9. An investor purchases the bonds of JLD Corp., which pay an annual coupon of 10% and mature in 10 years, at an annual yield to maturity of 12%. The bonds will most likely be selling at
