1. For a bond selling at a discount (less than its par value), its current yield compared to its yield to maturity is:

1. The same
2. Greater
3. Smaller
4. Need more info

2. Consider a 5-year bond with a current yield of 8% and a coupon rate of 10% (compounded yearly). One year from now this bond will have a quoted price which is most likely:

1. Higher
2. Lower
3. The same
4. Possibly higher or lower

3. Suppose you receive 1000 at the end of this year, 1500 a year later than this, and 2500 2 years from the initial 1000. If you can invest each cash flow at an interest rate of 8%, how much money will you have at the end of 5 years?