Question 16 Which of the following strategies would be most suitable for bond investors in a market of falling interest rates

a. sell corporate bonds and invest in government bonds.

b. sell short-term bonds and buy long-term bonds with the proceeds.

c. sell all bonds and invest in other types of assets.

d. only invest in bonds with short terms to maturity.

Question 17 Reginald has deposited $10,000 into an account that pays 5% interest per annum compounded annually, for exactly seven years. The amount of interest on interest that Reginald will earn is

a. $474.00

b. $505.00

c. $678.00

d. $571.00

Question 18 Which of the following statements about the realised yield on bonds is true?

a. realised yield can exceed yield to maturity at purchase date, when bonds are sold in the primary market.

b. realised yield is equivalent to the annualised capital gain on investment.

c. realised yield can exceed yield to maturity at purchase date, when bonds are sold in the secondary market.

d. realised yield always differs from the yield to maturity at purchase date.