1. You observe a 10-year, $1,000 par value bond trading for $835.44. Further, you know that the nominal yield to maturity on the issue is 9.25%. Given this information, what is the bond’s annual coupon payment?
2. Discuss what are the weakness and the strength of NPV?
3. Bond A and B are identical expect that, bond B has a longer maturity. Which of these best explains the price impact of a fall in yield?
a) the impact will be greatest for A because its duration is longer
b) Bond A, because duration is shorter
c) Bond B, because duration is longer
d) Bond B, because duration is shorter