1. Consider two bonds, A and B. Both bonds presently are selling at their par value of $1.000. Each pays interest of $120 annually. Bond A will mature in 5 years, while bond B will mature in 6 years. If the yields to maturity on the two bonds change from 12% to 14%, A) both bonds will increase in value but bond A will increase more than bond B By both bonds will increase in value but bond B will increase more than bond A C) both bonds will decrease in value but bond A will decrease more than bond B D both bonds will decrease in value but bond B will decrease more than bond A None of the above IN 2. What is the coupon payment of a 25-year $1000 bond with a 4.5% coupon rate with quarterly payments? A) $3.75 B) $11.25 OC) $22.50 OD) $45.00 None of the above 13. Suppose you currently have $747.25. Your plan is to have $1000 after 5 years. How much must the interest rate be? OA) 4.37 B) 4 869 OC) 5.40% D) 6.00 None of the above 19.5-year Treasury bonds yleld 5.5%. The inflation premium (IP) is 1.9%, and the maturity risk premium (MRP) on 5-year T-bonds is 0.4%. There is no liquidity premium on these bonds. What is the real risk-free rate, r*?. O A) 2 59% OB) 2.68% C) 3.20% D) 3.52% None of the above 20. Panama Corporation's 5-year bonds yield 8%, and 5-year T-bonds yield 4.8%. The real risk-free rate is r* = 2.75%, the Inflation premium for 5-year bonds is IP = 1.65%, the default risk premium for Panama's bonds is DRP = 1.20% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t - 1) * 0.1%, where t = number of years to maturity. What is the liquidity premium (LP) on Panama's bonds? OA) 1318 B) 2009 C) 1.62 D) 1809 None of the above