1. Someone offers you the following deal. They will pay you $5000 in two years if you agree to pay them $4500 today. If you accept the deal, what is your rate of return?

	a. 0.0731
	b. 0.0541
	c. 0.1111
	d. 0.0342

2. Suppose the present value of $524 paid at the end of one year is $495. What is the one-year discount rate?

	a. 0.0553
	b. 0.0586
	c. 0.0943
	d. 0.2525
	e. 0.1437

3. Why may investors buy a Treasury bill with a negative real interest rate?

	a. concern about high yields on other bonds
	b. concern about the high default risk of alternative investments
	c. fear of default by the US government
	d. fear of rising inflation