1) Choose the best multiple choice option:

Which bond has the longest duration? (Assume equal creditworthiness for each.)

a) 8-year maturity, 6% coupon

b) 8-year maturity, 11% coupon

c) 15 year maturity, 6% coupon

d) 15-year maturity, 11% coupon

2) Choose the best multiple choice option:

What is implied volatility? What is its source?

a) Stock momentum; Sharpe Ratio

b) Expected standard deviation of stock price(s); option prices

c) Beta divided by total risk; market portfolio

d) Option price momentum; risk-free rate