1. A U.S. Treasury Bill and a Government of Canada Treasury Bill have the same maturity value of $10,000, same term of 90-day, and same price of $9,873.64. Find the difference between the quoted rates of these two T-bills. (A) .129% (B) .135% (C) .141% (D) .152% (E) .163% 2. A 9-week U.S. Treasury Bill maturing for $10,000 is bought at a quoted rate of 4.7%. For the same price, a zero-coupon bond maturing for $41,000 at the end of 16 years is available. Compute the nominal yield rate convertible semiannually for this bond. (A) 8.65% (B) 8.71% (C) 8.93% (D) 9.07% (E) 9.40% 3. An insurance company is making annual payments to pay the medical costs for a claimant. The annual claims costs are valued at $2,000 today and are expected to increase with inflation at a rate of 3% per year. Payments are made for 19 years with the first payment to be made 5 years from today. Find the value today of this obligation if the effective annual interest rate is 6%. (A) 22.380 (B) 24.925 (C) 25,740 (D) 26.370 (E) 27,035 An investor took a two-year loan of $1,000. The effective annual interest rate that takes defaults, but not inflation, into account is 4% during the first year and 5% during the second year. The effective annual inflation rate is 1.2% during the first year and 1.7% during the second year. Compute the amount the investor should pay at the end of the second year. 4. (A) 1,119.70 (B) 1,120.50 (C) 1,121.80 (D) 1,122.50 (E) 1,123.90 A lender requires an effective annual interest rate of 4.7% assuming no defaults on a loan of $2,000 to be repaid after 8 years with a single payment. Find the effective annual interest rate the lender should offer if it is expected that the default rate is 13% with no recovery. 5. (A) 6.5% (B) 6.2% (C) 5.8% (D) 5.4% (E) 5.1%