Question 6.3

Which of the following are typical negotiable certificate of deposit (NCD) denominations? Select all that apply.

A.$300,000

B. $900,000

C. $1,000,000

D. $3,000,000

Which of the following are characteristics of negotiable certificates of deposit (NCD)? Select all that apply.

A. The return they provide does not include any interest.

B. Their denominations are typically in multiples of $1,000,000.

C. Activity in their secondary market is moderate.

D. They offer higher yields than Treasury bills with the same maturity.

Suppose Yakov purchased an NCD a year ago on the secondary market for $99,300 and redeems it today upon maturity for $100,000 plus $3,500 in interest. The annualized yield on this NCD is:

A. 3.85%

B. 4.23%

C. 4.31%

D. 4.48%