Question

im not sure what section this goes under, but i plan on taking exam fm somewhat soon and found this practice exam, i was wondering if i can get some solutions to this so i can compare it to the answers i get

1 1. Consider the yield curve given by the equation i 06+.004(k 1), where ig is the annual effective rate of return on zero coupon bonds with maturity of k years. Determine the 1-year forward rate for year 3 that is consistent with this yield curve. (A) 7.3% (B) 7.4% (C) 7.5% (D) 7.6% (E) 7.7% 2. A 2n-year 1000 face-value bond with annual coupons, redeemable at par, is bought to yield 4% annual effective. The amortization of premiun in the nth year is 13. The book value immediately after the next to last coupon is 1019.24. Determine the price of the bond. (A) less than or equal to 1150 (B) greater than 1150, but less than or equal to 1200 (C) greater than 1200, but less than or equal to 1250 (D) greater than 1250, but less than or equal to 1300 (E) greater than 1300

Answer 1

Jo deter mina Lyear ejteci seoutent sith thio yield etve yeac a i.'e a(2) 1+ 0.064 0.00y(A-)74 069)