1. During a one year period, the inflation rate was 5%. During the same year, you invested in Treasury bills and earned 7% return. You are in a 25% tax bracket.
A. Considering all factors, on the net you earned a rate of return of 2% in excess of the inflation rate
B. Considering all factors, on the net you earned a rate of return of 0.25% in excess of the inflation rate
C. Considering all factors, on the net you earned a rate of return of 1.75% in excess of the inflation rate
D. Considering all factors, on the net you earned a rate of return of 3.25%% less than the inflation rate
E. None of the above
2. What is duration of bond? Why is it important?
3. What is factoring? Why do companies factor?