7) Suppose you invest $2,000 today, compounded monthly, with an annual interest

Question

7) Suppose you invest $2,000 today, compounded monthly, with an annual interest rate of 7.50%. What is your investment worth in one year?

A) $2,155.27

B) $2,154.77

C) $2,152.81

D) $2,150.00

8) The Cougar Corporation has issued 20-year semi-annual coupon bonds with a face value of $1,000. If the annual coupon rate is 10% and the current yield to maturity is 12%, what is the firm's current price per bond?

A) $1,170.27

B) $1,171.59

C) $850.61

D) $849.54

9) Ten years ago Bacon Signs Inc. issued twenty-five-year 8% annual coupon bonds with a $1,000 face value each. Since then, interest rates in general have fallen and the yield to maturity on the Bacon bonds is now 7%. Given this information, what is the price today for a Bacon Signs bond? 9) _______

A) $1,116.54

B) $1,091.08

C) $1,000

D) $914.41

PLEASE CORRECT ANSWERS ONLY

Explanation / Answer

7. A

8. D

9. A.

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