1. A money market security has a face value of $10,000, a discount rate of 3%, and 182 days until maturity. Which of the following would increase the money market yield?
a. Increasing the discount rate from 3% to 4%
b. Decreasing the discount rate from 3% to 2%
c. Increasing the face value from $10,000 to $100,000
d. Decreasing the face value from $10,000 to $5,000
2. If a security has a bond equivalent yield of 2.75%, then what is the money market yield? Assume that the security matures in 30 days.
a. 2.85%
b. 2.71%
c. 0.225%
d. 0.222%
3. A municipal security offers a tax-exempt yield of 3%. What is the muni's taxable-equivalent yield? Assume a tax rate of 30%.
a. 4.29%
b. 2.96%
c. 3.04%
d. 3.67%