1. Arjen owns investment A and 1 bond B. The total value of his holdings is 2,400 dollars. Investment A is expected to pay annual cash flows to Arjen of 376.25 dollars per year with the first annual cash flow expected later today and the last annual cash flow expected in 4 years from today. Investment A has an expected return of 6.87 percent. Bond B pays semi-annual coupons, matures in 23 years, has a face value of $1000, has a coupon rate of 8.44 percent, and pays its next coupon in 6 months. What is the yield-to-maturity for bond B? ( Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098. )
2. Middlefield Motors has issued a bond that has a face value of $1000, pays annual coupons, and just made a coupon payment. One year ago, the price of the bond was 1,000 dollars, its yield-to-maturity was 4.4 percent, and it had 21 years until maturity. Today, the bond has a yield-to-maturity of 9.03 percent. What is the price of the bond today?