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74) A Treasury bill is quoted at a bank discount yield of 1.21 percent and has 15 days to
maturity. What is the bond equivalent yield given that this is a leap year?
A) 1.16 percent
B) 1.18 percent
C) 1.20 percent
D) 1.22 percent
E) 1.23 percent
75) What is the bond equivalent yield on a 120-day Treasury bill that has a bank discount yield
of 3.00 percent?
A) 2.97 percent
B) 2.99 percent
C) 3.02 percent
D) 3.04 percent
E) 3.07 percent
76) A Treasury bill has a face value of $250,000, an asked yield of 2.02 percent, and matures in
32 days. What is the price of this bill?
A) $249,397.19
B) $249,408.08
C) $249,511.11
D) $249,670.22
E) $249,717.08
77) A Treasury bill has a face value of $100,000, a price of $99,797.12, and matures in 35 days.
What is the asked yield?
A) 1.98 percent
B) 2.12 percent
C) 2.28 percent
D) 3.67 percent
E) 3.74 percent
78) A Treasury bill has a face value of $65,000, an asked yield of 3.05 percent, and matures in
60 days. What is the price of this bill?
A) $64,675.74
B) $64,777.60
C) $64,819.80
D) $64,868.00
E) $64,878.42
79) Your credit card has an annual percentage rate of 18.9 percent and compounds interest daily.
What is the effective annual rate?
A) 19.47 percent
B) 19.58 percent
C) 19.82 percent
D) 19.94 percent
E) 20.80 percent
80) A Treasury bill matures in 68 days and has a bond equivalent yield of 4.05 percent. What is
the effective annual rate?
A) 4.12 percent
B) 4.14 percent
C) 4.15 percent
D) 4.17 percent
E) 4.18 percent
81) A Treasury bill matures in 120 days and has a bond equivalent yield of 3.74 percent. What is
the effective annual rate?
A) 3.79 percent
B) 3.82 percent
C) 3.85 percent
D) 3.88 percent
E) 3.91 percent
82) A Treasury bill has 40 days left to maturity. The bank discount yield on the bill is 3.75
percent. What is the effective annual rate?
A) 3.55 percent
B) 3.66 percent
C) 3.77 percent
D) 3.88 percent
E) 3.99 percent
83) A 90-day Treasury bill has a bank discount yield of 4.2 percent. What is the effective annual
rate?
A) 4.22 percent
B) 4.25 percent
C) 4.28 percent
D) 4.32 percent
E) 4.37 percent
84) A $75,000 face value STRIPS is quoted at 95.100. What is the dollar price?
A) $71,067.50
B) $71,150.00
C) $71,215.00
D) $71,277.78
E) $71,325.00
85) What is the current value of a $5,000 face value STRIPS with 6 years to maturity and a yield
to maturity of 8.1 percent?
A) $2,998.09
B) $3,009.16
C) $3,105.02
D) $3,128.10
E) $3,133.40
86) A $50,000 face value STRIPS matures in 12 years and has a yield to maturity of 6.50
percent. What is the current dollar price of this security?
A) $21,199.68
B) $23,206.44
C) $25,038.18
D) $26,141.41
E) $28,809.18
87) A $7,500 face value STRIPS matures in 8 years and is currently quoted at a price of 65.24.
What is the yield-to-maturity?
A) 3.21 percent
B) 3.38 percent
C) 4.87 percent
D) 5.41 percent
E) 5.76 percent
88) A $20,000 face value STRIPS is currently quoted at 38.642 and has 8 years to maturity.
What is the yield-to-maturity?
A) 6.26 percent
B) 6.30 percent
C) 12.25 percent
D) 12.65 percent
E) 12.83 percent
89) A bond has a nominal rate of return of 5.87 percent and the inflation rate is 4.13 percent.
What is the approximate real rate?
A) 1.62 percent
B) 1.70 percent
C) 1.74 percent
D) 1.83 percent
E) 1.88 percent
90) You want to earn a real rate of return of 3.75 percent at a time when the inflation rate is 2.33
percent. What is the approximate nominal rate which you must earn?
A) 5.78 percent
B) 5.96 percent
C) 6.08 percent
D) 6.14 percent
E) 6.28 percent
91) The one-year interest rate is 4.80 percent and the two-year interest rate is 5.13 percent. What
is the one year interest rate one year from now? Assume the rates are effective annual rates.
A) 5.02 percent
B) 5.23 percent
C) 5.46 percent
D) 5.51 percent
E) 5.74 percent
92) What is the one year interest rate one year from now if the current one-year interest rate is
2.55 percent and the two-year interest rate is 3.15 percent? Assume the rates are effective annual
rates.
A) 3.62 percent
B) 3.67 percent
C) 3.71 percent
D) 3.75 percent
E) 3.88 percent
93) A one-year STRIPS sells at an interest rate of 3.15 percent and a two-year STRIPS sells at an
interest rate of 3.88 percent. What is the implied one year forward rate? Assume the rates are
effective annual rates.
A) 4.44 percent
B) 4.50 percent
C) 4.54 percent
D) 4.57 percent
E) 4.62 percent
94) A two-year STRIPS sells at an interest rate of 3.84 percent and a three-year STRIPS sells at a
rate of 3.97 percent. What is the implied one year interest rate two years from now? Assume the
rates are effective annual rates.
A) 4.23 percent
B) 4.36 percent
C) 4.41 percent
D) 4.45 percent
E) 4.50 percent
95) The following premiums apply to a 3-month bond: interest rate risk premium = 0.2 percent;
real return = 1.9 percent; default premium = 0.8 percent; inflation premium = 1.4 percent. What
is the expected nominal interest rate on a default-free security that has 3 months to maturity?
A) 1.9 percent
B) 2.0 percent
C) 2.1 percent
D) 3.3 percent
E) 3.6 percent
96) The following premiums apply to an 8-month bond: interest rate risk premium = 0.32
percent; liquidity premium = 0.44 percent; default premium = 1.15 percent; inflation premium =
2.44 percent; real rate = 3.20 percent. What is the expected nominal interest rate on an 8-month
risky security given these values?
A) 5.85 percent
B) 6.45 percent
C) 7.55 percent
D) 8.31 percent
E) 9.30 percent
97) The following premiums apply to a 6-month bond: interest rate risk premium = 0.22 percent;
real rate = 3.50 percent; default premium = 0.12 percent; inflation premium = 1.45 percent. What
is the expected difference in nominal interest rates between a 6-month risky security and a 6-
month, default-free security?
A) 0.12 percent
B) 0.34 percent
C) 0.37 percent
D) 1.57 percent
E) 1.60 percent
98) You want to purchase a security that will pay you $1,000 five years from now. If you want to
earn an annual nominal rate of 5.5 percent, how much should you pay for this investment today?
A) $727.41
B) $737.46
C) $741.41
D) $743.51
E) $765.13
99) A $50,000 face value bond matures in 75 days and has a bank discount yield of 3.75 percent.
What is the current value of the bond?
A) $49,392.19
B) $49,473.14
C) $49,486.47
D) $49,571.11
E) $49,609.38
100) A Treasury bill has a face value of $75,000, an asked yield of 3.05 percent, and matures in
90 days. What is the price of this bill?
A) $74,440.17
B) $74,477.60
C) $74,519.80
D) $74,568.00
E) $74,578.42
101) A $60,000 face value STRIPS is quoted at 96.100. What is the dollar price?
A) $57,267.50
B) $57,350.00
C) $57,415.00
D) $57,577.78
E) $57,660.00
102) You want to earn a real rate of return of 4.00 percent at a time when the inflation rate is
2.05 percent. What is the approximate nominal rate which you must earn?
A) 5.75 percent
B) 5.95 percent
C) 6.05 percent
D) 6.15 percent
E) 6.25 percent
103) A one-year STRIPS sells at an interest rate of 3.20 percent and a two-year STRIPS sells at
an interest rate of 3.90 percent. What is the implied one year forward rate? Assume the rates are
effective annual rates.
A) 4.20 percent
B) 4.30 percent
C) 4.40 percent
D) 4.50 percent
E) 4.60 percent
