1. Which of the following bank accounts has the highest effective annual return?
a) An account that pays 8.00% nominal interest with annual compounding.
b) An account that pays 8.00% nominal interest with semi-annual compounding.
c) An account that pays 8.05% nominal interest with quarterly compounding.
d) An account that pays 8.05% nominal interest with monthly compounding.
2. ABC Corp's outstanding bonds have a $1,000 par value, and they mature in 5 years. Their yield-to-maturity is 9%, based on semi-annual compounding, and the current market price is $853.61. The bond's annual payment is $53. What is the bond's current yield?
a) 3.11%
b) 6.22%
c) 3.02%
d) 6.04%