A 7-year, $1,000 face bond with a 5% coupon is currently selling with a 6% YTM (yield to maturity). What is the purchase price of the bond?

Multiple Choice

• $967.18

• $932.18

• $929.18

• $944.18

2)

Now assume that you purchase the bond in the Question #14 above. Immediately after you purchase the bond, the reinvestment rate in the market drops to 5%. What is your realized yield on your bond investment?

Multiple Choice

• 3.65%

• 6.45%

• 5.87%

• 4.36%