Consider the following four alternatives:

1. $132 received in two years.

2. $160 received in five years.

3. $200 received in eight years.

4. $220 received in ten years.

The ranking of the four alternatives from most valuable to least valuable if the interest rate is 10% per year would be:

		3, 4, 2, 1
		3, 1, 2, 4
		4, 3, 2, 1
		1, 2, 3, 4

Enterprise just issued a three-year, zero-coupon corporate bond at a price of $74. You have purchased this bond and intend to hold it until maturity. What is the expected return on your investment if there is no chance of default?

		Expected return < Yield to Maturity
		Cannot be determined
		Expected return = Yield to Maturity
		Expected return > Yield to Maturity