(i) because interest rates on treasury bills are more volatile than rates on long-term securities, the return on short-term treasury securities is usually above that on longer-term treasury securities. (ii) a treasury strip separates the periodic interest payments from the final principal repayment. a. (i) is true, (ii) false. b. (i) is false, (ii) true. c. both are true. d. both are false.

On january 2, well co. purchased 10% of rea, inc.’s outstanding common shares for $400,000, which equaled the carrying amount and the fair value of the interest purchased in rea’s net assets. well did not elect the fair value option. because well is the largest single shareholder in rea, and well’s officers are a majority on rea’s board of directors, well exercises significant influence over rea. rea reported net income of $500,000 for the year and paid dividends of $150,000. in its december 31 balance sheet, what amount should well report as investment in rea?