Money market security bond equivalent yield

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Reference no: EM131619341

1. A Treasury bond with exactly 18 months remaining until maturity offers a coupon rate of 6% with coupons paid semiannually. The bond is trading in the market for 101% of par value. The annualized 6-month and 1-year spot rates are 5.00% and 5.50%, respectively.

The 18-month spot rate is closest to:

A 2.685%.

B 5.297%.

C 5.349%

2. A money market security has a face value of $100, has a remaining maturity of 120 days, and is currently trading at a quoted rate of 2.5% on a discount rate basis based on a 360-day year convention.

The money market security’s bond equivalent yield is closest to:

A 2.532%.

B 2.521%.

C 2.556%.

Reference no: EM131619341

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