25. ___________ is the interest earned on both the initial principal and the interest reinvested from prior periods.

Simple interest

Compound interest

Interest on interest

Free interest

Dual interest

26. Bob is going to receive $5,000 bonus in 1 year. He wants to know the present value of it. The interest rate he used in his calculation is called _____________.

effective rate

simple rate

current yield

discount rate

compound rate

27. For a discount bond, we should see its __________.

I. market price = call price

II. market price < face value

III. coupon rate < yield-to-maturity

IV. current yield = yield-to-maturity

I and II only

I, II, and III only

II and III only

II, III, and IV only

II and IV only