1. You plan to retire in 35 years. At the end of each year, you plan on saving $15,000, and your bank pays you 2% annual interest. How much will you have saved by the time you retire?

A. $749,917

B. $374,979

C. $525,000

D. $262, 514

2. A bond with a face value of $1,000 pays a 10% (APR) semiannual coupon, and matures in 10 years. Similar bonds trade at a YTM of 8% (APR). What is the price of the bond?

A. $1,000

B. $679.52

C. $1,134.20

D. $1,135. 91

3. A major car manufacturing firm issues a 20-year $1,000,000 bond at par. The bond pays a 6% (APR) semiannual coupon. 5 years later, the Federal Reserve Board cuts the fed funds rate, causing interest rates for similar firms to fall to 4% (APR). What is the new bond price?

A. $1,222,368

B. $1,223,965

C. $1,000,000

D. $1,273,555

4. . If you bought the bond at issue and held it to maturity, what is the effective annual rate (EAR) that you earned?

A. 6%

B. 6.09%

C. 4%

D. 4.04%

5. The nominal rate quoted in the market is 8% per annum, and interest is paid every month. What is the effective annual rate (EAR)?

A. 8%

B. 8.3%

C. 0.67%

D. 96%