1. [Show Calculation] A coupon bond has 6% coupon rate (paid semiannually), $1,000 par value, matures in 6 years, and has YTM of 10%. The price of this bond is __________.

1. $822.73
2. $922.78
3. $924.18
4. $1,079.85
5. None of the above options is correct.

2. A coupon bond that pays interest of $100 annually has a par value of $1,000, matures in 5 years, and has YTM of 10%. The price of this bond is __________.

1. $900
2. $1,000
3. $1,100
4. $2,000
5. None of the above options is correct.

3. Which of the following statements is correct?

1. Collateralized debt obligations can be considered as insurance policies on the default risk.
2. Historical data tells us that the default risk premium is typically lower in weak economic conditions.
3. Junk bonds are bonds that are currently in default.
4. A bond may provide investors a negative return even without a default.
5. None of the above statement is correct.