If the market rate of interest is 10%, a $15000, 11%, 10-year bond that pays interest annually would sell at an amount that cannot be determined. equal to face value. less than face value. greater than face value.

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Ins 8. Suppose that today's interest rate on 1-year bonds is 4% (i10 year bonds next year, in two years, and in three years are expected to be 5%, 6%, and 7%, respectively. 0.04). Interest rates on 1- ha a. According to the Expectations Theory of Term Structure, what are the equilibrium interest rates today for otherwise comparable 2-year, 3-year, and 4-year bonds? b. Draw the yield curve for that case. or

A Bank offers both loans and deposits at a nominal  interest rate of 4% that is continuously compounded. What is the effective rate offered by the bank? The bank also offers a 3-year bond with face value £10000, redeemable at par, with 10% annual coupons. What is the final payment of that bond?  Assuming there are no arbitrage opportunities, what is the price of the above bond? Give your answer to five valid digits.