1. A. A customer asks bank if it would be willing to making the customer a one year loan at an interest rate of 8% one year from now. To compensate for the costs of making the loan, the bank needs to charge one percentage point more than the expected interest rate on a Treasury bond with the same maturity if it is to make a profit. If the bank manager estimates the liquidity premium to be 0.4%, and the one-year Treasury bond rate is 6% and the two-year bond rate is 7%, should the manager be willing to make the commitment? B. You observe the following market interest rates, for both borrowing and lending: One-year rate 5% Two-year rate 6% One-year rate one year from now-7.25% How can you take advantage of these rates to earn a riskless profit