A certain mortgage-backed security has a yield to maturity


1. A certain mortgage-backed security has a yield to maturity of 16% but makes payments quarterly. What is its effective annual yield?

A. 15.00%

B. 15.56%

C. 16.08%

D. 16.64%

E. 16.99%

F. 17.23%

2. A 6% coupon bond matures in 15 years and sells for $740. What percentage of the bond’s current value comes from the interest the bond pays over its remaining life? (Assume semi-annual compounding)

A. 75%

B. 65%

C. 55%

D. 45%

E. 35%

F. 25%

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Financial Management: A certain mortgage-backed security has a yield to maturity
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