1. a two years ago, you acquired a 10 year zero coupon, $1000 par value bond at 12% YTM. recently you sold this bond at 8% YMT. Using semi annual compounding, compute the annualized horizon return for this investments.

b muntek corporation is selling a new issue of bonds to raise money. the bonds will pay a coupon rate of 10% and will mature in 6 years. the bonds is $1000, interest is paid semi-annually. if the market rate of interest is currently 8% for similar bonds.

i. calculate the fair price an investor will be willing to pay for these bonds?

ii. what is the effective annual interest rate for this bond?

iii. what is the effective annual interest rate for this bond?