The Annual Interest on Sid Carrington's Three Investments Amounted to $35,100

question 163

Multiple Choice

The annual interest on Sid Carrington's three investments amounted to $35,100: 6% on a savings account, 9% on mutual funds, and 12% on bonds. If the amount of Sid's investment in bonds was triple the amount of his investment in the savings account, and the interest earned from his investment in bonds was equal to the dividends he received from his investment in mutual funds, find how much money he placed in each type of investment. ​

• A) $180,000 in a savings account, $45,000 in mutual funds, $135,000 in bonds
• B) $135,000 in a savings account, $180,000 in mutual funds, $45,000 in bonds
• C) $180,000 in a savings account, $135,000 in mutual funds, $45,000 in bonds
• D) $45,000 in a savings account, $180,000 in mutual funds, $135,000 in bonds
• E) $45,000 in a savings account, $135,000 in mutual funds, $180,000 in bonds

Understand the implications of subordination clauses and collateral in the safety and valuation of bonds.

Calculate the intrinsic value of a bond given its yield to maturity and coupon rate.

Define structured financial instruments and their purposes, including CDOs, SIVs, and CDSs.

Understand the function and operation of Structured Investment Vehicles (SIVs) and their role in the financial markets.

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Definitions:

Clayton Act

An antitrust law enacted in 1914 to prevent anti-competitive practices, monopolies, and to protect the rights of consumers and businesses.

Robinson-Patman Act

A United States federal law aimed at preventing anticompetitive practices by producers, specifically price discrimination.

Discriminated

Treated differently or unfairly, often based on race, gender, age, or sexual orientation.

Secondary Price Discrimination

A pricing strategy where the seller charges different prices to different consumers for the same product or service, based on factors other than the cost of production.