You want to value a corporate bond which matures in exactly 9 years.

The bonds have an annual coupon of 2%. Assume the bonds have a face value of 1,000. If the yield on similar bonds is 11%, what is the price of this bond?

The yield on U.S. Treasury bonds with the same maturity is 2.5%. Which of the following must be true about this bond?

Check all that apply:

1. Investors in the bond are capturing a risk premium by purchasing the bond

2. The coupon rate of the bond is too low

3. The yield curve is flatter than when the bond was issued

4. The promised yield on the bond is higher than the expected return

5. The bond has some positive probability of default.