Graded Homework

1. Within the secondary market, which of the following US Treasury securities’ prices will react most violently to a change in market interest rates (assume all securities were issued on the same date):
   

   a.	90-day T- Bills
   b.	10 year Treasury note
   c.	30 year Treasury Bond
   d.	being debt issues by the United States government – all will react the same but with different maturity dates

4 points

Question 9

1. If I were to use the Capital Asset Pricing Model (CAPM) to judge the required return 0n a stock, which piece of information might I find useful:
   

   The annual dividend paid

   the current price of the stock

   the company’s net income after tax

   the yield on 90-day T- Bills

4 points

Question 10

1. If the interest rate is zero, the future value interest factor equals:
   

   a.	0.000
   b.	1.000
   c.	10.000
   d.	undetermined

4 points

Question 11

1. In determining interest rates, the FED has the most direct influence on on the total change in which variable:
   

   a.	The nominal rate of interest
   b.	The real rate of interest
   c.	the inflation premium
   d.	the prime rate of interest