$\begin{array}{cc}\text { Year } & \text { 1-Year Forward Rate } \\1 & 5\% \\2 & 5.5\% \\3 & 6.0\% \\4 & 6.5\% \\5 & 7.0\%\end{array}$

question 64

Multiple Choice

$\begin{array}{cc}\text { Year } & \text { 1-Year Forward Rate } \\1 & 5\% \\2 & 5.5\% \\3 & 6.0\% \\4 & 6.5\% \\5 & 7.0\%\end{array}$
Calculate the price at the beginning of year 1 of an 8% annual coupon bond with face value $1,000 and 5 years to maturity.

• A) $1,105.47
• B) $1,131.91
• C) $1,084.35
• D) $1,150.01
• E) $719.75

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Definitions:

Cash Dividends

Money paid out to shareholders by a corporation, often as a portion of the company's profits.

Journal Entries

Records of financial transactions in the double-entry bookkeeping system, showing debits and credits made in accounts to maintain the ledger.

Available-For-Sale Investments

Financial assets not classified as held-to-maturity or trading securities, which can be sold in the financial markets.

Unrealized Gain

The increase in the value of an investment that has not been sold yet, and thus, the gain is not yet realized as actual income.