1. Which of the following is the best definition of “realized compound yield”?
The yield an investor realizes on the bond coupons
The total amount of the coupon and principal payments
The ending wealth divided by the starting wealth
The total amount of the coupon and principal payments, and the reinvestment of these flows
2. Assume that an investor buys one June NYSE Composite Index Futures Contract on May 1 at a price of 72. The position is closed out after four days. The prices on the three days after purchase were 72.5, 72.1 and 72.2. The initial margin is $3500.
$2500
$2750
$3700
$3750