1. How much is the par value for a 5-year maturity bond that has a price of $1,000 now and an annual coupon rate of 9% if the interest rate is 9%?
A) $700 B) $1,050 C) $1,000 D) $1,100 E) None of the above
2. What is the rate of return for an investor who pays $1,000 for a three-year bond with a 7% coupon rate and sells the bond one year later for $1,000?
A) 5% B) 6% C) 7% D) 8% E) none of the above