1) Interest rate risk is greater for ____ while reinvest rate risk is more severe for _____. Choose the best answer!

		A) long-term zero-coupon bonds; short-term bonds
		B) long-term coupon bonds; short-term bonds
		C) Short-term bonds; long-term bonds
		D) Short-term zero-coupon bonds; long-term bonds
		E) Interest rate risk is equally spread across all bond maturities

2) A zero-coupon bond with 5 years to maturity is currently selling at 88.5 PERCENT of par value. Calculate the yield to maturity on this bond.

		A) 5%
		B) 2.47%
		C) 1.22%
		D) None of the above is correct

3) If interest on a bank loan is determined by multiplying the interest rate by the original principal, ignoring the effects of compounding, the loan is most likely a:

		A) simple interest loan
		B) discount interest loan
		C) add-on interest loan
		D) an adjustable rate loan
		E) mortgage loan

4). The realized compound yield on a coupon-paying bond would equal the bond's yield to maturity if

		the coupon rate is equal to yield to maturity at the time a bond is issued
		the bond is issued at par
		the bond is issued at par and its coupons are reinvested at the coupon rate
		None of the above