1. Explain the Fed Fund rate and concept of risk free rate

2. A) Explain the three major policy tools of Federal Reserve. . b) If inflation is above FEDs target range, what it can do to lower it?

3. Explain the Eurodollars and LIBOR.

4. You have $10,000 to invest in a corporate bond. It pays four times a year at 5% interest rate and compounding quarterly. How much money you will have in one year?