1. If the real risk-free rate is 5%, and the expected rate of inflation is 1%, what is the estimated nominal risk-free rate?.

A) 6.05%.

B) No answer text provided.

C) 4.00%.

2. Which of the following statements about the yield curve is TRUE?

A) No answer text provided.

B) In a typical upward sloping yield curve, short and intermediate term rates are lower than long term rates.

C) Parallel shifts in the yield curve are not of concern to bond investors.

3. The structure of interest rates results from all the following EXCEPT:

A) creating the yield curve by plotting term to maturity against the coupon rate

B) assuming that individual discount rates do not change by the same amount

C) No answer text provided.