Recall that the Par Rate is the coupon rate such that a bond sells at par. A company wants to issue a 2 year bond with annual payment that sells at par. Assume R(0,1) = 4% and R(0,2)= 6%.The coupon rate should be set at

Question 1 options:

4%

7.3%

5.94%

6.21%

Consider the following US treasury rates table.

Maturity	Yield	Yesterday	Last Week	Last Month
6 Month	0.02	0.02	0.02	0.09
1 Year	0.23	0.23	0.22	0.23
2 Year	0.73	0.7	0.71	0.71
3 Year	1.04	1.03	0.99	1.07
5 Year	1.51	1.51	1.47	1.59
10 Year	2.18	2.19	2.13	2.2
30 Year	2.95	2.95	2.89	2.84

The forward rate F(2,1) is the rate that applies to borrowing or lending starting in 2 years from today for an additional year. F(2,1) is equal to

Question 2 options:

1.663%

2.95%

1.04%

0.73%

What is the effective annual interest rate of an investment that pays 6% per year compounded monthly?

Question 4 options:

6.168%

6.000%

.500%

12.001%

Consider the following US treasury rate table expressed in percentage.

Maturity t	Yield R(0,t)	Yesterday	Last Week	Last Month
6 Month	0.02	0.02	0.02	0.09
1 Year	0.23	0.23	0.22	0.23
2 Year	0.73	0.7	0.71	0.71
3 Year	1.04	1.03	0.99	1.07
5 Year	1.51	1.51	1.47	1.59
10 Year	2.18	2.19	2.13	2.2
30 Year	2.95	2.95	2.89	2.84

What is the the yield to maturity of a 2 year 5% bond with annual payments? (Hint: Use the General Formula to find the price first, then compute the yield to maturity)

Question 5 options:

	.4837
	.7182
	.2323
	.7321