1. XYZ currently has 21 long-term bond issues outstanding with various times-to-maturity and coupon rates. One of these bonds matures on Dec 1, 2031, approximately 15 years from today. It has a yield to maturity of 4.80%. For simplicity, assume that coupons are paid annually. The bond is currently selling for $1,105 based on a par value of $1,000. What is the coupon rate?
6.00% 5.20% 4.20% 5.80%
2. In the beginning of 2017, a bonds yield to maturity is 7.40%. It includes a 1.90% inflation risk premium. In 2017, actual inflation in the economy was 2.10%. What is the bond's real rate of return in 2017? Ignore other risk factors. You expect to hold the bond until maturity.
7.40%
5.30%
7.60%
5.50%