1. Which of the following would be an example of a derivative security?
a. A common share of a General Motors
b. A general revenue municipal bond
c. A call option on Mobil stock
d. A commodity futures contract
e. Both a and b
f. Both c and d
2. Which of the following bank accounts has the highest effective annual return?
a. An account which pays 10% nominal interest with monthly compounding
b. An account which pays 10% nominal interest with daily compounding
c. An account which pays 10% nominal interest with annual compounding
d. An account which pays 9% nominal interest with daily compounding
e. An account which pays 10% nominal interest with quarterly compounding
f. All of the above investments have the same effective annual return