1. ABC has issued a 15 years coupon paying bond which has a coupon rate of 7 percent per annum. The Face Value of the bond is 1 million dollars. The bond makes coupon payment quarterly. What is the price of the bond today if the Yield to Maturity is 14 percent per annum.
2. You have $300,000 for investment. There are 2 securities A and B. You invest 40% in security A and the remaining in security B. The standard deviation of security A is 0.55 while the standard deviation of security B is 0.75. The correlation between the returns on the 2 securities is -0.05. What is the variance of returns of the portfolio?