Bond A has a coupon rate of 10%, with a three-year maturity and a face value of $1,000. The discount rate now or future is 10%.
1. If you want to buy bond A now, what is the price you have to pay?
A) $1,000
B) $1,200.
C) $1,250
D) cannot be decided
E) none of the above
2. If you want to buy bond A now and hold it for one year, what is the expected return for your investment?
A) 8%
B) 10%
C) 12%
D) -12%
E) none of the above
10. If you want to buy bond A now and hold it until its maturity, what is the expected total return for your investment?
A) 8%
B) 5%.
C) 4%
D) no enough information
E) none of the above