What are taxable-equivalent yield and money market yield

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Reference no: EM131340044

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%

Reference no: EM131340044

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