EXHIBIT 1 Fixed-Rate Bonds Issued by Pro Star, Inc.

Bond	Maturity	Coupon	Type of Bond
Bond #1	1 October 20X3	4.40% annual	Option-free
Bond #2	1 October 20X3	4.40% annual	Callable at par on 1 October 20X1 and on 1 October 20X2
Bond #3	1 October 20X3	4.40% annual	Putable at par on 1 October 20X1 and on 1 October 20X2

All else being equal, if the shape of the yield curve changes from upward sloping to flattening, the value of the option embedded in Bond #2 will most likely:

	A.	increase
	B.	decrease
	C.	remain unchanged

EXHIBIT 1 Fixed-Rate Bonds Issued by Pro Star, Inc.

Bond	Maturity	Coupon	Type of Bond
Bond #1	1 October 20X3	4.40% annual	Option-free
Bond #2	1 October 20X3	4.40% annual	Callable at par on 1 October 20X1 and on 1 October 20X2
Bond #3	1 October 20X3	4.40% annual	Putable at par on 1 October 20X1 and on 1 October 20X2

All else being equal, if the investor assumes an interest rate volatility of 15% instead of 10%, the bond that would most likely increase in value is:

	A.	bond #1
	B.	bond #2
	C.	bond #3