1. What is the duration of a bond that will pay $50 per year in coupon payments and $1,000 after four years? Use a discount rate of 10 percent.
A. 8.4 years C. 3.7 years B. 4.0 years D. 0.27 years
2. What is the yield to maturity on a municipal bond scheduled to pay $10,000 upon maturity 5 years from now? This is a zero coupon bond selling for $8,220. Round the yield to maturity to the nearest percent.
A. 8 percent C. 4 percent B. 5 percent D. 3 percent