Suppose a 10-year US Treasury Note yields 4%, and a 10-year Lubbock County Note yields 2.75%. Calculate the tax rate the investor would be indifferent between the two bonds. (Enter percentages as decimals and round to four decimals)

Which bond would have the lowest interest rate risk?

		30-year, 3% coupon bond
		10-year, 3% coupon bond
		10-year, 5% coupon bond
		30-year, 5% coupon bond

Which of the following statements about credit ratings is least correct?

A		Credit ratings measure the securities default risk
	B	Credit ratings are adjust quickly to new information
C		Credit ratings do a reasonable job of predicting default on corporate debt
	D	Credit ratings are a pay-to-play scheme

Which cash flows are bond investors concerned about receiving in the future?

I. Par Value

II. Coupon payments

III. Capital Gain

IV. Reinvested interest income

A		I, II, III and IV
	B	I and IV only
C		II and III only
	D	I and II only