1.A bank offers a one-year CD with an APR of 3%. If the interest rate is compoundedcontinuously, what is the effective annual rate of the CD?

a 3.045%

b 3.020%

c 3.055%

d 3.030%

2.A financial instrument just paid the investor $100last year. If the cash flow is expected to last forever and increase each year at 3%, and with a discount rate of 8%, what should be the price that you are willing to pay for this instrument?

a $2,060

b $1,250

c $2,090

d $2,000

3.A bank offers a one-year CD with an APR of 6%. If the interest rate is compoundedmonthly, what is the effective annual rate of the CD?

a 6.168%

b 6.183%

c 6.136%

d 6.090%

An insurer requires $400,000 to provide a guaranteed annuity of $50,000 per year for 10 years, with the first payment in one year. What is the rate of return on this annuity?

a 3.28%

b 6.28%

c 4.28%

d 5.28%