1. Gabriele Enterprises has bonds on the market making annual payments, with 7 years to maturity, a par value of $1,000, and selling for $890. At this price, the bonds yield 7.6 percent. What must the coupon rate be on the bonds? Multiple Choice

a) 5.52%

b) 5.62%

c) 11.03%

d) 6.20%

e) 7.60%

2. You want to have $4 million in real dollars in an account when you retire in 40 years. The nominal return on your investment is 13 percent and the inflation rate is 3 percent. What real amount must you deposit each year to achieve your goal?

a) $9,780.85

b) $3,945.92

c) $10,269.89

d) $10,172.08

e) $9,291.81