1. is the amount earned on a deposit that has become the part of the principal at the end of a specified time period. A) Discount interest - B) Compound interest C) Primary interest D) Future value 2. Ted owns a bond which is callable in 2.5 years. The bond has a 6% coupon, pays interest semiannually, has a par value of $1,000, and has a yield to call of 6,3%. What is the call premium if the bond currently sells for $1,044,54? A) SSO B) $60 C) $70 D) $75 3. Jefferson-Smith bonds are quoted at a price of $952.42 for a $1,000 face value bond. These bonds have a modified duration of 9.84. What is the dollar value of an 01? A) S.0977 B) $.0963 C) S.1028 D) $.9372 4. John owns a bond that has a modified duration of 5.29 and a yield to maturity of 6.1%. If interest rates increase by 50 basis points, the bond's price will change by A) -2.65% B) -54% C) - 41% D) +.41% 5. A $43,000 face value bond will mature in 75 days and has a bank discount yield of 2.35%. What is the current value of the bond? A) $42,342.89 B) $42,789.48 C) $42,673.13 D) $42,712.32 6. What is the one-year interest rate one year from now if the current one-year interest rate is 3.49% and the two- year interest rate is 2.74%? Assume the rates are effective annual rates. A) 1.54% B) 1.95% C) 2.00% D) 3.12% 7. The variable 1,1 as used in the expectations theory is interpreted as the forward rate for one year: A) based on the prior one-year rate. B) at 1% c) based on a 1% increase from the current rate. D) commencing in one year. 8. Which one of the following borrowers will pay the rates depicted on a Treasury yield curve? A) large corporation B) default-free borrower C) bank's best customer D) high-risk borrower