1. The TED spread, measured as the difference in yields between LIBOR and US T-Bill yields, is useful for measuring:
The riskiness of the US stock market
The riskiness of the British pound
The tax savings on muni bonds
The riskiness of multinational banks
The riskiness AAA bonds compared to junk bonds.
2. Suppose you have a real estate opportunity that requires $100,000 investment today but will pay you $250,000 in 8 years. What interest rate, r, would you need so that the present value of what you get is equal to the present value of what you give up?
a) 10.135% b) 11.135% c) 12.135% d) 9.135%