1. Which of the following statements about term structure is(are) most correct?
A. Term structure is the relationship between interest rates and discount rates.
B. Term structure can be expressed either in tabular form or in graphical form.
C. A term structure graph is called a valuation graph.
D. The yield curve can have a variety of shapes, but the most common is downward sloping.
E. All of the above statements are correct.
2. What is the value of a 8 percent annual coupon, $1,000 par value bond with 20 years to maturity if the required rate of return on the bond is 10 percent?
A. $928.45
B. $849.46
C. $850.61
D. $767.83
E. $829.73