1)

What is the effective annual rate (EAR) for a nominal rate (quarterly compounding) of 3.14 %?

SET YOUR CALCULATOR TO 4 DECIMAL PLACES THEN INPUT THE NUMBER AS PERCENTAGE ROUNDING TO 2 DECIMALS. DO NOT ENTER THE % SYMBOL..i.e. if your answer is 7.77%, enter it as 7.77

2)

Consider the following returns and states of the economy for TZ.Com.:

Economy	Probability	Return
Weak	15%	-1%
Normal	50%	4%
Strong	35%	10%

What is the standard deviation of TZ's returns? SET YOUR CALCULATOR TO FOUR DECIMAL PLACES AND ROUND TO 2 DECIMAL PLACES AT THE END. DO NOT ENTER THE %. FOR EXAMPLE, IF YOUR ANSWER IS 7.70% ENTER IT AS 7.70.