1) The TriValley Corporation has a 3-month loan of $30,000.At the end of three months, the firm must repay the $30,000 plus $675 in interest.What is the effective annual rate on this loan?

a. 13.1%

b. 30.6%

c. 30.6%

d. 9.3%

2) A zero-coupon bond promises to pay $1,000 in ten years.The appropriate annual effective interest rate for the 10-year period is a constant 6%.Rounded to the nearest dollar, the current price of the bond is

a. $558

b. $747

c. $943

d. $1,000

3) For investors, the coefficient of determination shows how much variability in the returns of one asset can be associated with variability in the returns of the market. True or false?

a. True

b. False

4) The rate of return includes all of the following EXCEPT:

a. Income

b. Holding Period

c. Capital Gains

d. Percentage of Purchase Price

5) Assume that the following data on US Treasury securities is current:

Years to Maturity Yield to Maturity

1 4.32%

2 4.34%

3 4.34%

4 4.32%

5 4.36%

7 4.42%

10 4.59%

20 4.78%

Refer to the information above.According to the term structure, what would you have to pay for a $1,000, zero-coupon, Treasury bond that matures in five years?

a. $807.85

b. $808.62

c. $958.22

d. none of the above

6) If a bond trader indicates that the yield on a bond has increased by 50 basis points, what is the percentage change in yield?Then the bond has increased by percent.

a. True

b. False

7) If yields on long-term bonds are lower than the yields on short-term bonds, the term structure is said to be

a. upward sloping

b. downward sloping

c. flat

d. humped

8) If you deposit $20,000 today in an account at a quoted rate of 16% a year, compounded semiannually, how much will you have in the account at the end of five years if you make no withdrawals?

a. $42,007

b. $29,386

c. $43,822

d. none of the above

9) You purchased a bond for $1,000.At the end of a year, the bond paid interest of $90.You sold the bond for $950 after receiving the interest payment. What was your total rate of return on this investment?Round your answer to the nearest tenth of a percent.

a. 14.7%

b. 9.5%

c. 4.0%

d. -5.0%

10) A mutual fund reported the following quarterly returns for the year:2%, -0.5%, 1.5%, 5%.What was its total return for the year?Round your answer to the nearest tenth of a percent.

a. 8.0%

b. 8.2%

c. 3.3%

d. 37%