1.

An investor purchases a bond investment with 5 years until maturity through a securities firm. The firm sells the investor bonds that it already owns. Which of the the following alternatives best describes what just happened?

Select one:

a. The bond purchase is an example of a primary market transaction

b. The investor purchased bonds through a money market

c. The investor purchased bonds through an auction market

d. The investor purchased bonds through a dealer market

2.

You just won a lottery. You are given the choice between three cash prizes. You can receive $275,000 today. Alternatively, you can receive $360,000 in four years or $410,000 in six years. If you can earn 6% per year, compounding annually, which of these cash payments would you select?

Select one:

a. $360,000 in four years

b. $275,000 today

c. $410,000 in six years