Q1. Which of the following statements is TRUE?

a. The quoted price of a bond is the actual price an investor pays for the bond whenever the bond is sold at a date other than the date of a coupon payment.

b. The quoted price of a bond is the actual price an investor pays for the bond when the bond is sold on the date of a coupon payment.

c. A bond purchaser must pay the bond seller the cash price plus the accrued interest on the bond.

d. The cash price plus the accrued interest on the bond is the quoted price of the bond.

Q2. A 65-year-old man intends to use his retirement funds to purchase an annuity from a life insurance company. Given the amount of money the man has available to invest, the insurance company is able to offer two alternatives. The first option is to receive $2,673 each month for as long as he lives; the second option is to receive $2,910 each month, but for only 20 years (payments will be made to his estate if he should die before that time). The relevant interest rate is 6 percent per year monthly compounding.

How long must the man live so that the first option is a better deal?(Round answers to 0 decimal places)

Q3. The yield to maturity on a zero coupon bond, with a market price of $400, a face value of $1,000, and 15 years to maturity, is?