Upns joj uogewojui 8 Syun indah svis (orando 27. Suppose the U.S. Treasury offers to sell you a bond for $3.000. No payments will be bond matures 10 years from now, at which time it will be redeemed for $5.000. W you earn if you bought this bond at the offer price? a. 3.82% b.4.25% o payments will be made until the for $5.000. What interest rate would c. 4.72% d. 5.24% e. 5.779% 20. Assume that interest rates on 20-wear Treasury and corporate bonds are as follows. BBB = 10.18% T-bond = 7.72% AAA-8.72% A = 9.64% The differences in these rates were probably caused primarily by: a. Tax effects b. Default and liquidity risk differences. c. Maturity risk differences. d. Inflation differences. e. Real risk-free rate differences. 29. 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 ort e. Som can I 3. You plani its expected a. The ca that the rather t The disc c. The risk d. The total the later e. The disco 30. Which of the following statements is CORRECT? a. The yield on a 3-year Treasury bond cannot exceed the yield on a 10-year Treasury bond. b. The yield on a 2-year corporate bond should always exceed the yield on a 2 year Treasury bond. c. The yield on a 3-year corporate bond should always exceed the yield on a 2-year corporate bond. d. The yield on a 10-year AAA-rated corporate bond should always exceed the yield on a 5-year AAA-rated corporate bond. e. The following represents a "possibly reasonable" formula for the maturity risk premium on bonds: MRP = -0.1%(t), where t is the years to maturity