What is the effective annual interest rate of an investment that pays 6% per year compounded monthly?

Question 1 options:

6.168%

6.000%

.500%

12.000%

SaveQuestion 2(15 points)

Treasury Bonds are generally considered safer than Corporate bonds. Yet both types of fixed income instruments are subject to some sources of risk. Which sources of risk typically affect the price of domestic Corporate Bonds more than Treasury Bonds.

Question 2 options:

Interest rate risk and Liquidity risk

Exchangerisk and Interest rate risk

Liquidity risk and Default risk

Exchange risk and Default risk

SaveQuestion 3(15 points)

Consider the following US treasury bond rates.

MaturityYieldYesterdayLast WeekLast Month3 Month0.020.020.020.096 Month0.230.230.220.232 Year0.730.70.710.713 Year1.041.030.991.075 Year1.511.511.471.5910 Year2.182.192.132.230 Year2.952.952.892.84The price of a 30 year strip bond today is with face value equal to 100 is

Question 3 options:

74.77

41.80

239.22

1330.74

SaveQuestion 4(15 points)

Consider the following US treasury rates.

MaturityYieldYesterdayLast WeekLast Month6 Month0.020.020.020.091 year0.230.230.220.232 Year0.730.70.710.713 Year1.041.030.991.075 Year1.511.511.471.5910 Year2.182.192.132.230 Year2.952.952.892.84The price today ofa three year bond with 5% coupon annually paid is

Question 4 options:

114.24

111.64

113.83

111.71

SaveQuestion 5(15 points)

A repo is a way for an investor to lendmoney.

Question 5 options:

True

False

SaveQuestion 6(15 points)

Consider the following US treasury rates table.

MaturityYieldYesterdayLast WeekLast Month6 Month0.020.020.020.091 Year0.230.230.220.232 Year0.730.70.710.713 Year1.041.030.991.075 Year1.511.511.471.5910 Year2.182.192.132.230 Year2.952.952.892.84Theforward rate F(2,1) is the rate that applies to borrowing or lending starting in 2years from today for an additional year. F(2,1) is to

Question 6 options:

1.663%

2.95%

1.04%

0.73%

SaveQuestion 7(15 points)

The rate that makes the present value of the cash flows of a bond equal to its price is called

Question 7 options:

Discount yield

Yield to maturity

Zero coupon rate

Risk free rate

Par rate

SaveQuestion 8(15 points)

Recall that the Par Rate is the coupon rate such that a bond sells at par. A company wants to issue a 2 year bond with annual payment that sells at par. Assume R(0,1) = 4% and R(0,2)= 6%.The coupon rate should be set at

Question 8 options:

4%

7.3%

5.94%

6.21%

SaveQuestion 9(15 points)

Consider the following US treasury rate table.

MaturityYieldYesterdayLast WeekLast Month6 Month0.020.020.020.091 Year0.230.230.220.232 Year0.730.70.710.713 Year1.041.030.991.075 Year1.511.511.471.5910 Year2.182.192.132.230 Year2.952.952.892.84What is the yield to maturity of a 2 year 5% bond with annual payments?

Question 9 options:

.4837

.7182

.2323

.7321

SaveQuestion 10(15 points)

What is the price of B(0,3)?

Zero Coupon ratesR(0,1)4.5562%R(0,2)5.2706%R(0,3)6.0745%

Question 10 options:

0.8379

6.0745

.8887

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