1. What happens to the price of an existing bond (in the secondary markets, which are typically over-the-counter) when interest rates rise across all maturity lengths?
a. existing bond prices are left unchanged
b. existing bond prices fall
c. existing bond prices rise
2. Assume that today, the annualized 10-year interest rate is 15 percent. A five-year security has an annualized interest rate of 10 percent. What is the five-year forward rate five years from now?
3. Octant Inc. has a current ratio of 3.50, a quick ratio of 3, and an inventory turnover ratio of 6. Octant’s total assets are $2 million and its debt ratio is 0.81. Octant’s total cost of goods sold is $1.8 million. What is Octant’s amount of long-term debt?