1. A new customer applies for credit and indicates on the application form that he does not have any trade references due to the fact that he never had any credit facilities before. Credit bureau enquiries also display no existing records for the customer. The customer is 35 years of age. Select which one of the following statements is true in terms of the statement. Please note that only one answer is correct.

a. This case is a clear indication of fraud, it should be reported.

b. It is the type of individual a bank does not want to conduct business with

c. Depending on background, this could be normal.

d. No credit should be provided to this individual.

2. A bond with annual coupon rate of 8.10% and price of $780 just yesterday paid a coupon. A total of 16 coupons remain to be paid. Suppose you buy the bond at today’s price, hold it and receive 7 coupons, and then sell the bond. If at the time you sell the bond its yield-to-maturity has increased a total of 90 basis points find the bond selling price and annual rate of return throughout the investment horizon.

a. the bond selling price is $919 and annual ROR equals 10.68%

b. the bond selling price is $824 and annual ROR equals 11.74%

c. the bond selling price is $919 and annual ROR equals 11.74%

d. the bond selling price is $824 and annual ROR equals 10.62%

e. the bond selling price is $705 and annual ROR equals 10.62%