1. Mary bought a coupon-paying bond at a price of $1,025. The bond pays one coupon per year, at the end of year. One year after Marys purchase, she received a coupon of $80; she also sold the bond for $1,010. What was Marys realized rate of return? (to the nearest tenth of a percent)

a. 7.8%

b. 6.3%

c. 8.0%

d. 1.5%

2. Consider a bond with a $1,000 face value, a yield to maturity of 8.0%, a coupon interest rate of 9.0% with annual, end-of-year payments, and a maturity of 2 years. What is this bonds duration? (to the nearest hundredth)

a. 1.46

b. 1.00

c. 1.92

d. 2.00