Statements regarding bond trading

Assignment Help Risk Management

Reference no: EM132003025

1. Which of the following statements regarding bond trading is INCORRECT?

A. The long-term bonds issued by the U.S. government are called Treasury Bonds.

B. The long-term bonds issued by state and local governments in the United States are called municipal bonds.

C. The price at which a dealer is willing to sell a security is called the ask price.

D. The price a dealer is willing to pay for a security is called the bid price and it is usually slightly higher than the corresponding ask price.

2. You need to borrow $28,000 to buy a car. The current loan rate is 2.9% APR compounded monthly and you want to pay the loan off in equal monthly payments over 4 years. What is the correct computation to find your monthly payment (C)?

A. C = $28,000 [PVIFA(2.9%/12, 4)]

B. C = $28,000 [1 - (1/1.02948)] /(.029/4)

C. $28,000 = C [1 - (1/1.00241748)] / .002417

D. $28,000 = C [1 - (1 /1.006584)] / .00658

Reference no: EM132003025

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