If you expect stock prices to decline, then you'll want to enter into an agreement that will allow you to sell shares at a pre-determined price. This way, you are effectively locking in the future value of the shares. There are only two strategies that will enable you to carry out this transaction. First, buying a put will give you the "right" to deliver these shares at a pre-determined price. And second, selling stock index futures will "obligate" you to deliver these shares at a pre-determined price.

The present value of a payment received n years hence is given by:
n
PV = FV / (1 + R)
where: PV = present value, FV = future value, R = discount rate per period, n = # of periods
Therefore, the value of this bond is:
5 x 2
PV = $ 1,000 / [1 + (0.07/2)] = $708.92.
Note that the semi-annual compounding should be assumed if not specified.

Since each score has been raised by 7 points, the mean will also be raised by 7 points. The new mean is 74. 50% of the scores will be less than the mean of a normal distribution.