7. The spot rate for year 1 is 7.5% and the forward rate for year one to two is 8%. The two-year discount factor is: (a) 0.845. (b) 0.861. (c) 0.852. (d) 0.888. (e) 0.874 .24 A bond will pay $50 in interest at the end of each of the next four years, plus the principal of $1,000 at the end of the fourth year. If the required yield-to-maturity is 6% and the present price is $980, the bond's NPV is: (a) - $41. (b) + $41. (c) - $15. (d) - $33. (e) + $15. 25. A bond will pay $80 in interest at the end of each of the next six years, plus the $1,000 principal at the end of the sixth year. If the required yield-to-maturity is 10%, the intrinsic value is: (a) $874. (b) $913. (c) $952. (d) $988. (e) $1,012. 26. Bond A has a yield-to-maturity of 8%; Bond B at 6.5%. The yield spread in basis points is: (a) 1500. (b) 15. (c) 0.15. (d) 150. (e) 1.5. 27. A bond will pay $40 of interest at the end of each of the next five years, plus the principal of $1,000 at the end of year five. If the required yield-to-maturity is 5% and the present market price is $935, the NPV is: 13. The one-year spot rate is 5% and the two-year spot rate is 7%. An investor adopts the strategy of investing for one year and will reinvest for the second year. Under unbiased expectations theory, he or she must expect that (a) the one-year forward rate for years 1 to 2 will be above 9%. ????????????????????????????? (b) the two-year spot rate is too high.