1. You buy a bond issued by terlingua oil & gas exploration co. The coupon rate is 9% and coupons are paid semi annually. Par of your bond is $10000. The bond matures in 10 years. Your price today on the bond is $9500. In six months, the ytm on the bond has risen 1%. You collect the coupon payment and sell the bond. What is your effective annual rate of return?
2. Samantha opened a savings account this morning. Her money will earn 5 percent interest, compounded annually. After five years, her savings account will be worth $5,600. Assume she will not make any withdrawals. Given this, which one of the following statements is true?