1. A bond has eight years to maturity and a coupon rate of 6.5 percent. Coupon payments are made annually and the bond has a face value of $1,000. This bond is currently selling in the market for $862. What is the yield-to-maturity on this bond?
A. 6.5 percent
B. 10 percent
C. 8.5 percent
D. 9 percent
E. None of the options is correct
2. A bank is required to maintain an average daily balance at the Fed of $600 million. In the first 2 days of the maintenance period, it maintains a balance of $450 million, the next three days it maintains a balance of $700 million, the next two days it maintains a balance of $650 million, the next three days it maintains a balance of $450 million, and the next three days it maintains a balance of $650 million. What does its balance at the Fed has to be on the last day of the maintenance period in order to have a zero cumulative reserve deficit?
A. $600 million
B. $400 million
C. $500 million
D. $800 million
E. None of the options is correct