Question 1 (15 points)

What is the effective annual interest rate of an investment that pays 6% per year compounded monthly?

Question 1 options:

	6.168%
	6.000%
	.500%
	12.000%

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Question 2 (15 points)

Treasury Bonds are generally considered safer than Corporate bonds. Yet both types of fixed income instruments are subject to some sources of risk. Which sources of risk typically affect the price of domestic Corporate Bonds more than Treasury Bonds.

Question 2 options:

	Interest rate risk and Liquidity risk
	Exchange risk and Interest rate risk
	Liquidity risk and Default risk
	Exchange risk and Default risk

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Question 3 (15 points)

Consider the following US treasury bond rates.

Maturity	Yield	Yesterday	Last Week	Last Month
3 Month	0.02	0.02	0.02	0.09
6 Month	0.23	0.23	0.22	0.23
2 Year	0.73	0.7	0.71	0.71
3 Year	1.04	1.03	0.99	1.07
5 Year	1.51	1.51	1.47	1.59
10 Year	2.18	2.19	2.13	2.2
30 Year	2.95	2.95	2.89	2.84

The price of a 30 year strip bond today is with face value equal to 100 is

Question 3 options:

	74.77
	41.80
	239.22
	1330.74