1. The maturity of commercial paper varies from:

	a.	?six to twelve months.
	b.	?four to eight months.
	c.	?one to five months.
	d.	one to nine months.?
	e.	five to ten months.?

2. Which of the following types of bonds protects a bondholderagainst increases in interest rates??

	a.	?Mortgage bonds
	b.	?Floating-rate bonds
	c.	?Municipal bonds
	d.	?Income bonds
	e.	?Bonds with call provisions

3. Glen wants to take a holiday that costs $8,850, butcurrently he only has $2,750 saved. If he invests this money at 8percent interest compounded annually, how long will he have to waitto take his holiday? Use a financial calculator to make thecalculation.?

	a.	15.19 years?
	b.	?14.12 years
	c.	?16.25 years
	d.	?12.36 years
	e.	?13.52 years

4. Treasury securities that mature in 6 years currently have aninterest rate of 8.5%. Inflation is expected to be 5% in each ofthe next three years and 6% each year after the third year. Thematurity risk premium is estimated to be 0.1% × (t – 1), where t isequal to the maturity of the bond (i.e., the maturity risk premiumof a one-year bond is zero). The real risk-free rate is assumed tobe constant over time. What is the real risk-free rate ofinterest??

	a.	?0.25%
	b.	?1.75%
	c.	?1.00%
	d.	?2.50%
	e.	?0.50%