1. Future Value Compute the future value in year 6 of a $330 deposit in year 2 and another $130 deposit at the end of year 4 using a 8% interest rate.

A) $660.00 B) $729.96 C) $600.59 D) $586.40

2. Future Value of an Annuity What is the future value of a $500 annuity payment over 5 years if the interest rates are 4 percent?

A) $2,155.06 B) $2,708.16 C) $2,600.00 D) $608.33

3) Determinants of Interest Rate for Individual Securities A 2-year Treasury security currently earns 6.00 percent. Over the next two years, the real interest rate is expected to be 3.15 percent per year and the inflation premium is expected to be 2.15 percent per year. What is the maturity risk premium on the 2-year Treasury security?

A) 1.20% B) 1.00% C) 5.30% D) .70%

4) Time to Maturity A bond issued by a corporation on June 15, 2007 is scheduled to mature on June 15, 2019. If today is December 16, 2008, what is this bond's time to maturity?

A) 10 years B) 1 year, 6 months C) 10 years, 6 months D) 12 years

5) Stock Index Performance On November 27, 2007, The Dow Jones Industrial Average closed at 13,148.44, which was up 310.04 that day. What was the return (in percent) of the stock market that day?

A) +.024% B) +2.41% C) -.024% D) -2.41%

6) Expected Return Compute the expected return given these three economic states, their likelihoods, and the potential returns:

Economic State	Probability	Return
Fast Growth	.1	22%
Slow Growth	.8	12%
Recession	.1	-27%

A) 9.1% B) 14.5% C) 7.0% D) 11.3%

7) Required Return If the risk-free rate is 9.9 percent and the market risk premium is 5.8 percent, what is the required return for the market?

A) 15.7% B) 5.8% C) 9.9% D) 4.1%