QUESTION 1

1. While doing research on the bond market, Ming Yu finds the following default-free zero-coupon bonds:

   Bond	Years to Maturity	Yield to Maturity	Par Value
   A	1	5.5%	$1,000
   B	2	5.7%	$1,000
   C	3	6.0%	$1,000
   D	4	6.5%	$1,000
   E	5	8.0%	$1,000

   Using implied rates, what will the price of Bond C be one year from now?

   		$839.62
   		$885.80
   		$890.00
   		$941.17
   		$943.40

1 points

QUESTION 2

1. While doing research on the bond market, Ming Yu finds the following default-free zero-coupon bonds:

   Bond	Years to Maturity	Yield to Maturity	Par Value
   A	1	5.5%	$1,000
   B	2	5.7%	$1,000
   C	3	6.1%	$1,000
   D	4	6.5%	$1,000
   E	5	8.0%	$1,000

   The implied one-year rate 3 years from now should be ____________.

   		7.3%
   		7.7%
   		8.0%
   		8.3%
   		8.7%

   3. If interest rates suddenly decrease, which of the two bonds will likely experience the greater % increase in price?

   Bond	Type	Coupon Rate	Maturity	Par Value	Price
   JYP	Semi-Annual	5%	15 years	$1,000	$903
   YG	Semi-Annual	5%	15 years	$1,000	$1,111

   		JYP Bond.
   		YG Bond.
   		The % price decrease will be the same for the two bonds.
   		There is not enough information.