1. Suppose that you buy an 8% annual coupon bond today when the interest rate is 10%. The bond has 10 years to maturity. One year from now, the YTM on your bond has declined by 1%, and you decide to sell. What is the return on your investment?
2. Schraeder Corporation has 20,000 shares outstanding at $30 each. The firm expects to raise $200,000 via a rights offering at a subscription price of $25. How many rights are required for each new share?