Treasury bond will pay lump sum

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Reference no: EM131847942

1. Cara has a loan from her credit union at a rate of 9.1% for which her payments are $185 per month. The interest is computed on a daily basis (assume 365 days per year) on the unpaid balance of the loan. If the loan balance after her last payment was $2815 and Cara makes her next payment 30 days later, how much of the payment is paid towards interest?

A) $42.09 B) $21.05 C) $7.02 D) $70.18

2. A U.S. Treasury bond will pay a lump sum of $1,000 exactly 3 years from today. The nominal interest rate is 6%, semiannual compounding. Which of the following statements is CORRECT? a. The periodic interest rate is greater than 3%. b. The periodic rate is less than 3%. c. The present value would be greater if the lump sum were discounted back for more periods. d. The present value of the $1,000 would be smaller if interest were compounded monthly rather than semiannually. e. The PV of the $1,000 lump sum has a higher present value than the PV of a 3-year, $333.33 ordinary annuity.

Reference no: EM131847942

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