1. An investor has a 1-year, semiannual, 10% coupon bond which is priced at $1,025. If the 6-month spot rate on a bond-equivalent basis is 8%, the 1-year theoretical spot rate (as a BEY) is:
a. 6.4%
b. 7.3%
c. 8.0%
2. Effective annual rate is going to be higher than nominal rate if-
a. Number of periods is equal to 1
b. EAR is always lower than nominal rate
c. Number of periods is more than 1
d. EAR is always higher than nominal rate
e. Number of periods is less than 1