Question: Do not use thousand separator, use 2 decimal places only (i.e. 1000.00 instead of 1,000). Which among the bonds is the cheapest? Option 1 Option

Do not use thousand separator, use 2 decimal places only (i.e. 1000.00 instead of 1,000).

Which among the bonds is the cheapest?

Option 1 Option 2 Option 3 Option 4

Bond face value 5000.00 5500.00 6000.00 6500.00

Maturing at 110 110 105 105

Yield 6% 6% 6% 6%

Compounded Semi-annually Semi-annually Quarterly Quarterly

If coupon pays 7.00% 7.00% 7.25% 7.25%

PMT

FV

Purchased on 1/1/2015 1/1/2015 1/1/2015 1/1/2015

Maturing on 3/1/2020 1/1/2020 3/1/2020 1/1/2020

Purchase Price

The cheapest bond is option number .

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