1. When the yield curve is downward-sloping
A. the inflation rate is expected to rise.
B. long-term yields are higher than short-term yields.
C. short-term yields are higher than long-term yields.
D. the bond market is anticipating the U.S. Treasury may default on its obligations.
2. Farley Inc. has perpetual preferred stock outstanding that sells for $46.00 a share and pays a dividend of $5.00 at the end of each year. What is the required rate of return? Round your answer to two decimal places.
3. The yield to maturity of a $1,000 bond with a 6.8 % coupon? rate, semiannual? coupons, and two years to maturity is 8.8% ?APR, compounded semiannually. What is its? price?
The price of the bond is ?$____?(Round to the nearest? cent.)