Question: Now its time for you to practice what youve learned. Suppose your friend is debating purchasing a bond that has a $1,000 par value, 11

Now its time for you to practice what youve learned.

Suppose your friend is debating purchasing a bond that has a $1,000 par value, 11 years to maturity, and a 5% annual coupon. Your friend would like to determine the yield to maturity if the bond sells for a price of $1,178. What is the yield to maturity for this bond?

1.13%

1.78%

3.07%

4.18%

Assume the yield to maturity remains constant over the next four years. What will the price of the bond be four years from now?

$1,050

$1,120.00

$1,158.75

$1,178

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