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Question: 1 if you buy a semiannually compounded 5year corporate coupon...

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1. If you buy a semi-annually compounded 5-year corporate coupon bond with a face value of $1000, coupon rate of 4%, and yield to maturity of 6%, then you know that

a)the fair price of the bond is less than $1000.

b)the coupon amount is $30.

c)both a) and b) are correct.

d)neither a) nor b) is correct.

2. Assuming 365 days in a year, if the annual interest rate is 10%, what is the present value of a $100 that you are going to receive 2-years from now with daily compounding?

a)$81.88

b)$82.64

c)$90.48

d)$122.14

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