a. You purchased a 15-year bond at price that gave a yield to maturity of 6%. The bond pays an annual coupon rate of 5% and has a $1,000 par value. One year later you received the annual interest payment and immediately sold the bond at a price that gave a yield to maturity of 7.4%, calculate your total annual rate of return for holding the bond for one year. Round dollar values to the nearest dollar. Use one decimal for interest rates. (4 points) (SHOW ALL WORK)

b. Your broker tells you there is a bond that matures in 18-years, priced at 105 percent of par. The bond has a 4% coupon that pays interest semi-annually. What is the most you would pay for a zero-coupon bond, maturing in 18 years with a $1,000 par value, if you wished to receive the same yield as the regular bond? Round dollar values to the nearest dollar. Use two decimals for interest rates. (3 points) (SHOW ALL WORK)