Questions 1) A risk-free zero-coupon bond has 15 years to maturity. Which of the following is

QUESTION

Questions 1) A risk-free, zero-coupon bond has 15 years to maturity. Which of the following is closest to the price per $1,000 of face value that the bond will trade at if the Yield to Maturity is 7%? a) $296 b) $327 c) $362 d) $388 2) Colby bonds pay annual interest of $140. They mature in 10 years and have a par value of $1,000. The required rate of interest is 12%. The present value of Colby Bonds is? a) Greater than $1,000 b) Equal to $1,000 c)Less than $1,000 d) Cannot be determined 3) Using the Colby bonds in the preceding question, what is the present value of the bonds if they are called in 5 years at 110% of par value? a) $1,056 b) $1,072 c) $1,149 d)$1,128

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