a) It is the end of month 0. Consider the following information for a bond with non-standard fixed coupons and 6 months left to maturity, as set out in the table below:

End of month	Coupon ($)	Principal ($)
1	1	0
2	2	0
3	3	0
4	4	0
5	3	0
6	2	100

What is the annualized yield to maturity of this bond if it is currently trading at $110?

b)

You are given the following information regarding asset returns of Asset 1 and Asset 2.

VCV

	Asset 1	Asset 2
Asset 1	0.2300	0.1200
Asset 2	0.1200	0.4200

Inverse VCV

	Asset 1	Asset 2
Asset 1	5.1095	-1.4599
Asset 2	-1.4599	2.7981

Expected returns

Asset 1	4%
Asset 2	6%

The risk-free rate is 2% and the market risk premium expected return is 5% with a variance of 14%.

What is the variance of the minimum variance portfolio of asset 1 and asset 2?

c) Bravo is bidding for a property. In a year's time the property will be valued at either $20,000 (with probability 0.4) or $30,000 (with probability 0.6). Bravo has an initial wealth of $50,000. Bravo's utility is given by the natural logarithm of final wealth. Calculate the maximum price Bravo