1. Jones Corp’s outstanding bonds, which have a face value of $1,000, have 10 years remaining to maturity. The bonds’ coupon rate is 6%, and interest is paid semiannually. If investors require a rate of return equal to 5% to invest in similar-risk bonds, what should be the market price of Jones’ bonds?

$895.05 $935.54 $1,014.39 $1,077.95 None of the answers are correct.

2. The current risk-free rate of return is 4% and the market risk premium is 5%. If the beta coefficient is 2.0, what is the stock’s required rate of return?

14.0% 5.0% 18.0% 4.5% 13.0%