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26) Suppose you purchase a zero-coupon bond with face value $1,000, maturing in 20 years, for $214.51. If the yield to maturity on the bond remains unchanged, what will the price of the bond be five years from now? Select one:

a.$680.58

b.$315.24

c.$410.91

d.$387.52

27) Assume that you purchase a 30-year stripped bond with a $100,000 face value. The current bond price is $9,937.73 and the yield is 8%. Calculate the interest revenue during the first year of holding the bond. Calculate amounts to nearest dollar, no $.

28) The dealer quotes a $1,000,000, 180-day Canadian T Bill at a price of $970,000. What is its bond equivalent yield? (enter 1/100 of one percent, no $ signs, example, 9.87)

29) You purchase a one-year bond offering a 6% yield to maturity. If the market expects inflation to be 3% per year, what is the real return on the bond using the exact Fisher formula? Calculate to the nearest 1/100 of 1%. For example, 5.67% would be entered as 5.67.

30) You are advising a relative on the markets expectation for future interest rates. An investment with three years to maturity offers a 6.997% yield. According to analysts, they expect a yield of 6.0% for next year and a yield of 7.0% for the following year. Use your knowledge of the Expectations Theory to estimate the expected yield for year 3.

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