Please answer all questions and show work where needed.

Part 1. Concept Practice

1. Are the following bonds issued at par, premium, or discount?

	Discount, premium or par
Coupon rate is 3%; yield is 4%
Annual coupon of $100; yield to maturity of 9%
Semi-annual coupon of $40; yield of 8%

2. Bond A sells for $990 and Bond B sells for $1010. Both bonds have a yield of 4%. Which one has the higher coupon? (Please answer A, B or A=B.)
3. Bond A is a par bond and Bond B is a discount bond. They are of the same riks. Which one has the higher coupon? (Please answer A, B or A=B.)
4. Bonds of the same risk must have the same after-tax yield. (True or False.)
5. A municipal bond should offer a higher yield to maturity than a similar corporate bond because of the tax advantage. (True or False.)
6. A bond with semi-annual payments of $25 has a higher coupon rate than a bond with annual payment of $40. (True or False.)
7. A bond with semi-annual payments of $25 has a higher coupon rate than a bond with annual payment of $50. (True or False.)
8. If you pay a very high tax rate you would most likely prefer a municipal bond over a similar corporate bond. (True or False.)