1) A 1-year discount bond with a face value of $1,000 was purchased for $900.

What is the yield to maturity to 2 decimal places?

What is the yield on a discount basis to 2 decimal places?

2) Your company owns the following bonds:

Bond	Market Value	Duration
A	$13 million	2
B	$18 million	9
C	$20 million	3

If general interest rates rise from 8% to 8.5%, what is the approximate change in the value of the portfolio?

3) Suppose a municipal bond offers a yield to maturity of 5% and a same maturity corporate bond offers a 4% yield. For which values of the marginal tax rate an investor would prefer to buy the corporate bond?