1. You buy an 8 year $1000 par value bond that has a 6% yield and a 6% annual payment coupon. In one year the yields in the economy have risen to 7 % and you’ve decided to sell the bond. Your one year holding period return will be :

a. .61 %

b. -5.39 %

c. 1.28%

d. -3.25%

2. If the coupon rate of a bond is 4.50% and the bond is selling at a premium, which of the following is the most likely yield to maturity on the bond?

a. 4.30 %

b. 4.50%

c. 5.20%

d. 5.50%