MCQ6. The annualized yield is 3% for 91-day commercial paper and 3.5% for 182-day commercial paper (as per the bond equivalent quotation). Wen Wen wants to invest in this money market instrument in 91 days and for 91 days. What is the quoted expected 91-day commercial paper rate 91 days from now (chose the closest answer)?

1. 7.09%
2. 3.96%

1. 0.99%
2. None of the above

MCQ7. Suppose that Yokos utility function for inter-temporal consumption is:

U(C₀,C₁) = [ln(C₀)] + [ln(C₁)]/(1+)

where C₀ is his current period consumption, C₁ is his future period consumption and (=10%) is his subject rate of time preference. If Dipo is endowed with m₀ = $1000 this period and m₁ = $50 in the next period. Suppose the risk-free interest rate is 3%. What is his optimal consumption path (i.e., the optimal level of current and future consumption) if he can only allocate wealth through lending and borrowing (C₀,C₁)?

11) Suppose an Xiaoyi Nie has utility function U(W)=ln(W). Her current wealth is $1,000. If she is faced with 50/50 chance of losing and winning $50, how much will she pay to avoid such uncertain situation?

1. 6.907
2. 1000
3. 1.255
4. 998.745

1. C₀=567.0365; C₁=530.9524
2. C₀=549.2372 , C₁=514.2857:
3. C₀=1050; C₁=0
4. C₀=1000; C₁=50

9) The chart below shows the prices on two consecutive days for Wal-Mart, a component stock of the Dow Jones Industrial Average. The chart also shows the sum of the 30 stock prices on each of the days. Use this price information to answer the following questions. (Hint: the PWI is calculated as the adjusted average price)

Stock	Close: t	Close: t+1
Wal-Mart (WMT)	49.6	24.47
Sum of Prices (i=030Pi)	1505.74	1469.29

The Dow Jones Industrial Average closed at a value of 12,240.01 on day t, based on a divisor of 0.1230179. On day t+1, Wal-Mart (WMT) experiences a 2-for-1 stock split. Calculate the return on the Dow Jones Industrial Average from day t to day t+1.

1. 0.687%
2. -0. 786%
3. -7.68%
4. 0.12099173