1. Ally wishes to leave a provision in her will that $ 9 000 will be paid annually in perpetuity to a local charity. How much must she provide in her will for this perpetuity if the interest rate is 3 ?%?

2. Over a 38-year period an asset had an arithmetic return of 12.4 percent and a geometric return of 10.3 percent. Using Blume’s formula, what is your best estimate of the future annual returns over 6 years? 10 years? 19 years?

3. Using the timeline technique, calculate the price, duration, modified duration and convexity for a semiannual note that has a $1,000 face value, four years left until maturity and pays a coupon rate of 4.25% that’s currently yielding 6.75%.