1. Which of the following statements regarding bond trading is INCORRECT?
A. The long-term bonds issued by the U.S. government are called Treasury Bonds.
B. The long-term bonds issued by state and local governments in the United States are called municipal bonds.
C. The price at which a dealer is willing to sell a security is called the ask price.
D. The price a dealer is willing to pay for a security is called the bid price and it is usually slightly higher than the corresponding ask price.
2. You need to borrow $28,000 to buy a car. The current loan rate is 2.9% APR compounded monthly and you want to pay the loan off in equal monthly payments over 4 years. What is the correct computation to find your monthly payment (C)?
A. C = $28,000 [PVIFA(2.9%/12, 4)]
B. C = $28,000 [1 - (1/1.02948)] /(.029/4)
C. $28,000 = C [1 - (1/1.00241748)] / .002417
D. $28,000 = C [1 - (1 /1.006584)] / .00658