1. What is a second method of forecasting a stock’s future price that applies the time value of money.
2. A bond has a current yield of 9% and a yield to maturity of 10%. Is this bond a premium, par, or discount bond? Explain.
3. The yield to maturity on one-year zero-coupon bonds is 8%. The yield to maturity on two-year zero-coupon bonds is 9%. What is the forward rate of interest for the second year?