Question: 1. The same firm issues two different bonds. The bonds are identical in every respect except for their time to maturity. Bond A matures in

1. The same firm issues two different bonds. The bonds are identical in every respect except for their time to maturity. Bond A matures in 5 years and Bond B matures in years. Which bond has a higher price?

a. Both have the same value b. One must know the compounding frequency to answer the question c. One must know YTM and coupon rate to answer the question

d. Bond B

e. Bond A

2. Assume the real rate of interest is 3.00% and the inflation rate is 5.00%. The value today of receiving $41,000 in 13 years is $_________

a.13,058.81

b.11,350.57

c. 12,884.12

d. 15,528.29

e. 14,806.04

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