1. You are scheduled to receive $4,500 at the end of each quarter over the next 3 years. If the annual interest rate is 10%, with quarterly compounding, what is the present value of this stream of cash flows? (to the nearest dollar)
a. $96,229
b. $47,314
c. $68,132
d. $46,160
2. The possibility that a bond issuer will not pay back the investor in a timely manner is the essence of:
a. interest rate risk.
b. default risk.
c. exchange rate risk.
d. inflation risk.
3. A bank paid a stated annual interest rate of 12%, with monthly compounding. What was the equivalent (or "effective") annual rate?
a. 14.40%
b. 12.68%
c. 12.75%
d. 6.25%