Question

Use the bond term's below to answer the question
Maturity 8 years
Coupon Rate 5%
Face value $1,000
Annual Coupons
YTM 6%

Assuming the YTM remains constant throughout the bond's life, what is the bond's current yield between periods 4 and 5 ?

5.08%

5.18%

5.33%

4.93%

You plan on going to law school for 3 years starting in 4 years.
The cost of tuition for the first year will be $40,000
The cost of tuition for the second year will be $41,600
The cost of tuition for the third year will be $43,264

How much would you have to invest today in an account that earns 3.00% APR compounded annually) to exactly pay for your tuition?

$104,521

$101,477

$110,887

$107,256

$107,657

Use the bond term's below to answer the question
Maturity 6 years
Coupon Rate 3%
Face value $1,000
Annual Coupons
When you buy the bond the interest rate is 5%

Right after you buy the bond, the interest rate changes from 5.00% to 4.50% and remains there.

What is the price effect in year 5 ?

$4.27

$4.91

$5.16

$3.88

$4.69

Answer 1