1. A certain mortgage-backed security has a yield to maturity of 16% but makes payments quarterly. What is its effective annual yield?
A. 15.00%
B. 15.56%
C. 16.08%
D. 16.64%
E. 16.99%
F. 17.23%
2. A 6% coupon bond matures in 15 years and sells for $740. What percentage of the bond’s current value comes from the interest the bond pays over its remaining life? (Assume semi-annual compounding)
A. 75%
B. 65%
C. 55%
D. 45%
E. 35%
F. 25%