A) Microsoft has bonds on the market with 16 years to maturity, a YTM of 7 percent, and a current price of $968. What must the annual coupon rate be on the companys bonds?

	a.	13.49%
	b.	13.64%
	c.	6.74%
	d.	3.33%
	e.	6.66%

B)

When investors allocate their money between risk-free asset and tangency portfolio, the allocation to tangency portfolio:

	a.	increases with a higher risk-free rate
	b.	decreases with a higher level of risk aversion
	c.	decreases with a higher Sharpe ratio
	d.	decreases with a higher expected tangency portfolio return
	e.	increases with a greater variance of tangency return