1. A ten-year bond is issued with 10% coupon and the discount rate is 12%. After a single year, interest rates go up two percent to 14%. What should happen to your holding period return over that single year?

2. How do changes in the market interest rate affect business spending and consumer spending?

3. Ryan Gray, a student at State College, has a balance of $410 on his retail charge card; if the store levies a finance charge of 19 percent per year, how much monthly interest will be added to his account? Assume that the balance is computed by the average daily balance method. Round the answer to 2 decimal places.

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