1. Mary bought a coupon-paying bond at a price of $1,025. The bond pays one coupon per year, at the end of year. One year after Marys purchase, she received a coupon of $80; she also sold the bond for $1,010. What was Marys realized rate of return? (to the nearest tenth of a percent)
a. 7.8%
b. 6.3%
c. 8.0%
d. 1.5%
2. Consider a bond with a $1,000 face value, a yield to maturity of 8.0%, a coupon interest rate of 9.0% with annual, end-of-year payments, and a maturity of 2 years. What is this bonds duration? (to the nearest hundredth)
a. 1.46
b. 1.00
c. 1.92
d. 2.00