1. A Treasury bond with exactly 18 months remaining until maturity offers a coupon rate of 6% with coupons paid semiannually. The bond is trading in the market for 101% of par value. The annualized 6-month and 1-year spot rates are 5.00% and 5.50%, respectively.
The 18-month spot rate is closest to:
A 2.685%.
B 5.297%.
C 5.349%
2. A money market security has a face value of $100, has a remaining maturity of 120 days, and is currently trading at a quoted rate of 2.5% on a discount rate basis based on a 360-day year convention.
The money market security’s bond equivalent yield is closest to:
A 2.532%.
B 2.521%.
C 2.556%.