1. Typically, the lowest interest rate would be paid on:

1. 30 year U.S. Treasury bonds

2. 90 day U.S. Treasury bills

3. junk bonds that mature in 5 years.

4. 10 year U.S. Treasury notes

2. Assume the price return on a bond is 2% over a year. However, if the yield curve was not upward sloping then the price return on the bond would have been 0.5%. How much return was made using the strategy of rolling down the yield curve?

a. -2.5%

b. -1.5%

c. 0.5%

d. 1.5%

e. 2.5%