Use the following information to answer Q6 and Q7.

Didi Company is preparing an 8-year par bond offering with a 5 percent semiannual coupon and a face value of $1,000. Alonso Inc., with the same credit rating as Didi Company, has an outstanding bond with 8 years to maturity and a 6 percent annual coupon.

6. Which of the following statements below about Didi Companys bond is correct?

a) The final payment will be in the amount of $1,050.

b) Next year, if rates stay the same, the price of the bond will be higher than now.

c) The bond has a current yield of 5%.

d) Didi Companys bond price is higher than Alonso, Inc.s bond price. e) None of the above statements are correct.

7. What is the market price of Alonso, Inc.s bond?

a) $963.14

b) $1,000.00

c) $1,064.63

d) $1,065.28

e) Insufficient information to derive.