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solution

Kings Real Estates are considering to issue two Treasury bonds. Bond L has a 9 percent annual coupon, and Bond K has a 6 percent annual coupon. Both bonds have a yield to maturity of 7 percent. Assume that the yield to maturity is expected to remain at 7 percent. Which of the following statements is most correct?
If the yield to maturity remains at 7 percent, the price of both bonds will increase by 7 percent per year.
If the yield to maturity remains at 7 percent, the price of both bonds will increase over time, but the price of Bond A will increase by more.
If the yield to maturity remains at 7 percent, the price of both bonds will remain unchanged.
If the yield to maturity remains at 7 percent, the price of Bond A will decrease over time, but the price of Bond B will increase over time.

Asad wanted to deposit $2,000 in a savings account that pays 8 percent interest, compounded quarterly. Asad was planning to use it to finish your last year in college. Eighteen months later, Asad decides to go to the Magalia Mountains, to become a ski instructor rather than continue in school, so Asad close out his account. How much money will Asad receive?
$3,582
$3,126
$3,082
$3,163

8-year annuity due has a present value of $6,000. If the interest rate is 5 percent, the amount of each annuity payment is closest to which of the following?
$884.17
$847.36
$809.39
$804.72

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