1. Today, Maureen purchased a coupon bond for $1,020. It has a face value of $1,000, an 8% coupon rate (with coupons paid just once per year), and a maturity of 4 years. Maureen plans to hold the bond for just one year and then sell it;and she expects to sell at a price of $1,060. What is Maureens’ expected rate of return? (to the nearest hundredth of a percent)
a. 3.92%
b. 7.80%
c. 8.00%
d. 14.00%
2. Consider a bond with the following characteristics:If the annual required rate of return is 6%, what is the bonds fair present value? (to the nearest dollar)
a. $1,045
b. $1,085
c. $1,427
d. $919