1. Which of the following risk-free, zero-coupon bonds could be bought for the lowest price? Please show work.
A. one with a face value of $1000, a YTM of 3.2%, and 8 years to maturity
B. one with a face value of $1000, a YTM of 5.9%, and 20 years to maturity
C. one with a face value of $1000, a YTM of 6.8%, and 10 years to maturity
D. one with a face value of $1000, a YTM of 4.8%, and 5 years to maturity
2. Which of the following statements is FALSE?
A. The bond certificate typically specifies that the coupons will be paid periodically until the maturity date of the bond. Please show work.
B. Usually the face value of a bond is repaid at maturity.
C. The only cash payments the investor will receive from a zero-coupon bond are the interest payments that are paid up until the maturity date.
D. The bond certificate indicates the amounts and dates of all payments to be made.