14. Jose now has $500. How much would he have after 6 years if he leaves it invested at 7.0% with annual compounding? a. $570,28 b. $892.93 c. $727.85 d. $750.50 e. $697.84 15. Suppose a State of New York bond will pay $1,000 ten years from now. If the going interest rate on these 10-year bonds is 5.0%, how much is the bond worth today? a $614.00 b. $564.80 c. $736.70 d. $466.57 e. $724.42 16. Which of the following factors would be most likely to lead to an increase in nominal interest rates? a. Households reduce their consumption and increase their savings b. A new technology like the Internet has just been introduced, and it increases investment opportunities c. There is a decrease in expected inflation d. The economy falls into a recession e. The Federal Reserve decides to try to stimulate the economy 17. Assume that interest rates on 20-year Treasury and corporate bonds are as follows: T-bond : 7.72% AAA = 8.72% A = 9.64% BBB = 10,18% The differences in these rates were probably caused by a. Tox effects b. Default and liquidity risk differences C. Maturity risk differences d. Inflation differences e. Real risk-free rate differences 18. If the Treasury yield curve is downward sloping, how should the yield to maturity on a 10-year Treasury coupon bond compare to that on a 1-year T-bill? a. The yield on a 10-year bond would be less than that on a 1-year bill b. The yield on a 10-year bond would have to be higher than that on a 1-year bill because of the maturity risk premium c. It is impossible to tell without knowing the coupon rates of the bonds d. The yields on the two securities would be equal e. It is impossible to tell without knowing the relative risks of the two securities