1 an investor has a 1-year semiannual 10 coupon bond which, Ask an Expert

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1. An investor has a 1-year, semiannual, 10% coupon bond which is priced at $1,025. If the 6-month spot rate on a bond-equivalent basis is 8%, the 1-year theoretical spot rate (as a BEY) is:

a. 6.4%

b. 7.3%

c. 8.0%

2. Effective annual rate is going to be higher than nominal rate if-

a. Number of periods is equal to 1

b. EAR is always lower than nominal rate

c. Number of periods is more than 1

d. EAR is always higher than nominal rate

e. Number of periods is less than 1

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93043147

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