1. Compute the FV of an annuity of $300 paid each 6 months for 6 years at a nominal rate of 10% compounded semiannually.

a. $4,775.14

b. $2,040.57

c. $6,415.29

d. $2,314.68

2. The real risk-free rate is 3.10%. Inflation is expected to be 2.72% this year and 3.94% during the next 2 years. Assume that the maturity risk premium is zero. What is the yield on 3-year Treasury securities?

a. 6.76%

b. 6.63%

c. 6.39%

d. 6.52%

3. The real risk-free rate is 2.15%. Inflation is expected to be 3.40% this year, 4.05% next year, and 3.8% thereafter. The maturity risk premium is estimated to be 0.05 x (t-1)%, where t = number of years to maturity. What is the yield on a 9-year Treasury note?

a. 6.33%

b. 6.92%

c. 6.70%

d. 7.29%