5) A bond will sell at a discount when

A) the coupon rate is greater than the current yield and the current yield is greater

than yield to maturity.

B) the coupon rate is greater than yield to maturity.

C) the coupon rate is less than the current yield and the current yield is greater than

the yield to maturity.

D) the coupon rate is less than the current yield and the current yield is less than

yield to maturity.

E) None of the options is true.

6) An upward sloping yield curve is a(n) ________ yield curve.

A) normal

B) humped

C) inverted

D) flat

E) None of the options

7) The following is a list of prices for zero-coupon bonds with different maturities and par

value of $1,000.

Maturity Years	Price
1	$925.16
2	$862.57
3	$788.66
4	$711.00

What is, according to the expectations theory, the expected forward rate in the third

year?

A) 7.23% B) 9.37% C) 9.00% D) 10.9%