1. ___________ is the interest earned on both the initial principal and the interest reinvested from prior periods.
Simple interest
Compound interest
Interest on interest
Free interest
Dual interest
2. Bob is going to receive $5,000 bonus in 1 year. He wants to know the present value of it. The interest rate he used in his calculation is called _____________.
effective rate
simple rate
current yield
discount rate
compound rate
3. For a discount bond, we should see its __________.
I. market price = call price
II. market price < face value
III. coupon rate < yield-to-maturity
IV. current yield = yield-to-maturity
I and II only
I, II, and III only
II and III only
II, III, and IV only
II and IV only