1. On May 1, 2021, you are considering to buy a newly-issued ABC Company bond, which is quoted as "ABC 4.2s34" in the WSJ and has a par value of $1,000. The company pays coupon interests every 6 months. If you require a 5.1% return on this bond, how much would you pay for this bond? (Hint: Identify annual coupon rate, years to maturity, and yield to maturity to compute the bond price.)

Group of answer choices

$911.55

$915.22

$916.45

$912.60

$914.31

2. Assume that interest rates on 3-year Tesla AA and 3-year ABC Company AA corporate bonds are as follows:

Tesla AA = 4.72% ABC AA = 5.02%

Tesla bond is traded on the exchange, but ABC Company bond is not. The difference in these rates were probably caused primarily by:

(1) Liquidity premium; (2) Default risk premium; (3) Maturity risk premium; (4) Inflation premium

Group of answer choices

(2) and (3)

(1)

(1) and (2)

(1) and (3)

(2)