The spot rate for year 1 is 7% and the forward rate for year one to two

is 10%. The two-year discount factor is _____ .

A. Show the Formula (0.2 point) B. Show the Steps and calculation (0.3 point) C. Present the Answers (0.1 point)

Question 40.6 pts

A bond will pay $90 in interest at the end of each of the next four years, plus the principal of $1,000 at the end of the fourth year. If the required yield-to-maturity is 6% and the present price is $980, the bond's NPV is

A. Show the Formula (0.2 point) B. Show the Steps and calculation (0.3 point) C. Present the Answers (0.1 point)

Bond A has a yield-to-maturity of 8%; Bond B at 7.5%. The yield spread in basis points is _____ .

A. Show the Formula (0.1 point) B. Show the Steps (0.1 point) C. Present the Answers (0.1 point)

Question 70.5 pts

A bond has an expected yield-to-maturity of 6% and an 10% probability of default. If the bond defaults, the bondholders should receive 80% of the market value. If fairly priced, the bond should have a promised yield-to-maturity of _____ .

A. Show the Formula (0.2 point) B. Show the Steps (0.2 point) C. Present the Answers (0.1 point)

Question 130.6 pts

A bond has a duration of 9 years and a present yield-to-maturity of 8%. If the yield-to-maturity rises to 10%, the approximate bond price change would be _____ .

A. Show the Formula (0.2 point) B. Show the Steps and calculation (0.3 point) C. Present the Answers (0.1 point)

Question 141.1 pts

A four-year $1,000 bond will pay $70 in interest at the end of each year. With a yield-to-maturity of 8%, its present market price is $934. Its duration is ______ .

A. Show the Formula of duration (0.1 point) B. Create the Table (0.6 point) C. Show the Steps to get the market price (0.2 point) D. Show the Steps to get the duration (0.2 point)

Question 150.5 pts

A pension plan will have a cash outflow in 3 years. They can invest in 2 year bonds with duration of 1.7 years and 4 year bonds with a duration of 3.7 years. To immunize the portfolio, the proportion invested in the 4 year bonds should be ______ .

A. Show the Formula (0.2 point) B. Show the Steps (0.2 point) C. Present the Answers (0.1 point)