Interest rates to decline and want to make the most money

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Reference no: EM131898667

1. If you expect interest rates to decline and want to make the most money:

a) You prefer a bond with a call option over an identical bond without a call option

b) You prefer short-term bonds over otherwise identical long-term bonds

c) You prefer a bond with a lower coupon rate over an otherwise identical bond with a higher coupon rate

2. If the TIPS coupon is 3.0% (this is the annual rate, the bond pays a coupon twice per year), annual inflation (CPI) is 2%, and the bond par value is $10,000, what is the first coupon payment on the bond?

a) $148.50

b) $150.00

c) $151.50

d) $153.00

e) $300.00

f) $303.00

Reference no: EM131898667

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