1. Stephanie would like to purchase a bond that has a par value of $1,000, pays $100 at the end of each year in coupon payments, and has three years remaining until maturity. If the prevailing annualized yield on other bonds with similar characteristics is 12 percent, how much will Stephanie pay for the bond?

a. ?$856.80

b. ?$1,000.00

c. ?none of the above

d. ?$951.97

2. Morgan stock has an average return minus the average risk-free rate of 12.5 percent, a beta of 2.5, and a standard deviation of returns of 20 percent. The Treynor index of Morgan stock is

a. ?none of the above

b. ?0.35.

c. ?0.03.

d. ?0.05.

e. ?0.0625.