1. A bond with 14 years remaining until maturity is currently trading for 96 per 100 of par value. The bond offers a 3 percent coupon rate with interest paid semiannually.

The bond's annual yield to maturity is ____ %. Include two decimal places in your answer and do not include the percent symbol. For example, if the bond's annual yield to maturity is 95.25% then answer 95.25, not .95, not 95.25%.

2. A bond with a coupon rate of 5% is currently trading at a price that indicates a yield to maturity of 6.5%. Which of the following is true?

A. This security is not trading at an equilibrium price.

B. The bond is trading at a discount to par

C. None of the other answers are correct.

D. The bond is trading at par.

E. The bond is trading at a premium to par

2. Consider the following two bonds that each have 5 years to maturity and pay interest annually.

Bond A's coupon rate is 7.

Bond B's coupon rate is 6.

At a market discount rate of 0.13, what is the price difference between Bond A and Bond B per hundred dollars of par value? State your answer in terms of absolute value. For example if Bond B's price per hundred dollars of par value is $100 higher than Bond A's then the difference in price is $100.

Answer to the nearest cent. Do not include the dollar sign in your answer.