3. Suppose that the price of a bond is equal to the sum of the present value of its future payments. Suppose further that this b ond pays $50 in one year and $1,050 in two years. What is the price of the bond if the interest rate is 5 percent?
a. $1,050.00 b. $1,045.35 c. $1,000.00 d. $945.35
6. Which of the following is the correct expression for finding the present value of a $1,000 payment one year from today if the interest rate is 6 percent?
a. $1,000 ο΄ (1.06) b. $1,000 (1.06) c. $1,000/(1.06) d. None of the above is correct.
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