1. Your brother has asked you to help him with choosing an investment. He has $7, 000 to invest today for a period of two years. You identify a bank CD that pays an interest rate of 0.0500 annually with the interest being paid quarterly. What will be the value of the investment in two years?
2. Arco industries has a bond outstanding with 15 years to maturity, an 8.25% nominal coupon, semiannual payments, and a $1,000 par value. The bond has a 8.40% yield to maturity. But it can be called in 6 years at a price of $1,045. What is the bonds yield to call?