Think of a $1,000 bond with a 6% ($60) coupon that matures several years into the future. If you manage to buy it for $850, the bond's CURRENT yield is approximately:

4%

5%

6%

7%

8%

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Question 412 pts

This is the first question for which you may need to use the time value of money tables (or a calculator): Think of an automobile currently priced at $20,000. If price of cars increases 5% per year, what will be the approximate price of an equivalent vehicle 5 years from now. (Hint the inflation rate can be treated as an interest rate.)

$23.500

$24,000

$24,500

$25,000

$25,500

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Question 422 pts

Suppose that you plan to invest $1200 at the end of each of the next 9 years and you want to have accumulated $15,600 at the end of this period, what rate of return (to the nearest percent) would you need to achieve? (Hint: this is what I called an A=BxC problem in which you know A and B.)

8%

9%

10%

11%

12%