1. Which of the following would be the best type of coupon to receive when short term interest rates are falling?
A. Fixed rate
B. Inflation linked
C. Inverse floater
D. Floating rate
2. Which of the following has both coupons and principal payments?
A. Strips
B. Commercial paper
C. Perpetual bond
D. Medium term note
3. A Floating Rate Note with a face value of $100 makes semi-annual payments in June and December based on Libor. The libor rates observed for June and December are 3.00% and 4.00% respectively. What is the cash value of the payment to be received in December?
A. 1.50
B. 2.00
C. 3.00
D. 4.00