1: A 5-year 7% annual coupon bond yields 6%. Draw the picture for the face value of $10,000. |----------|----------|----------|----------|----------|----------|

The price of the bond P0 = $ ..................

would be quoted in the paper as ..................

The current yield is .....................%.

The yield to maturity is ...........................%.

You buy the bond for the price you computed, hold it for one year, receive the coupon cash flow, and sell it for 94.8670.

The realized yield on your investment is: ........................%