Question 88nbspthe rate of return an investor actually

Question

Question 1.1. A Treasury bill matures in 81 days and has a bond equivalent yield of 2.79 percent. What is the effective annual rate? (Points : 1)        2.79 percent        2.82 percent        2.85 percent        2.88 percent        2.91 percent

Question 2.2. A 6.5 percent coupon bond has a face value of $1,000 and a current yield of 6.61 percent. What is the current market price? (Points : 1)        $983.36        $989.18        $1,011.82        $3,933.43        $4,067.47

Question 3.3. Which one of the following rates is the rate a commercial bank must pay the Federal Reserve to borrow reserves overnight? (Points : 1)        Discount        Fed funds        Financial overnight        Daily        Institutional

Question 4.4. What is the annual interest divided by the market price of a bond called? (Points : 1)        Coupon rate        Effective annual yield        Current yield        Yield to maturity        Yield to market

Question 5.5. Which one of the following is a short-term debt instrument issued by the U.S. Treasury? (Points : 1)        Freddie Mac        Ginnie Mae        T- note        T-bill        T-bond

Question 6.6. A discount bond _________________. (Points : 1)        pays a variable coupon payment        has a market price in excess of face value        has a duration that is less than that required by an investor        has a par value that is less than $1,000        has a face value that exceeds the market value

Question 7.7. A bond has a face value of $1,000 and a coupon rate of 5.5 percent. What is your annual interest payment if you own 8 of these bonds? (Points : 1)        $110        $220        $330        $440        $880

Question 8.8. The rate of return an investor actually earns from owning a bond is called which one of the following? (Points : 1)        Market return        Realized yield        Annualized coupon yield        Maturity yield        Call yield

Question 9.9. Which one of the following increases the probability that a bond will be called? (Points : 1)        The call premium is relatively high.        The bond is within the call protection period.        The bond was issued within the past year.        Market interest rates decline.        The bond is selling at par.

Question 10.10. You want to purchase a security that will pay you $1,000 six years from now. If you want to earn an annual nominal rate of 7.5 percent, how much should you pay for this investment today? (Points : 1)        $627.41        $630.17        $641.41        $647.96        $662.01