1. The interest earned on most municipal bonds is exempt from federal taxes.

	True
	False

2. You are considering buying bonds in ACBB, Inc. The bonds have a par value of $1,000 and mature in 35 years. The annual coupon rate is 20.0% and the coupon payments are annual. If you believe that the appropriate discount rate for the bonds is 17.0%, what is the value of the bonds to you?

	$1,374.92
	$1,175.75
	$850.25
	$1,019.97
	$1,285.29

3. XZYY, Inc. currently has an issue of bonds outstanding that will mature in 25 years. The bonds have a face value of $1,000 and a stated annual coupon rate of 12.0% with annual coupon payments. The bond is currently selling for $959. The bonds may be called in 4 years for 112.0% of the par value. What is your expected quoted annual rate of return if you buy the bonds and hold them until maturity?

	18.68%
	15.83%
	11.43%
	12.54%
	20.27%