1. You buy an 8 year $1000 par value bond that has a 6% yield and a 6% annual payment coupon. In one year the yields in the economy have risen to 7 % and you’ve decided to sell the bond. Your one year holding period return will be :
a. .61 %
b. -5.39 %
c. 1.28%
d. -3.25%
2. If the coupon rate of a bond is 4.50% and the bond is selling at a premium, which of the following is the most likely yield to maturity on the bond?
a. 4.30 %
b. 4.50%
c. 5.20%
d. 5.50%