1. An 8.7%, fifteen-year bond yields 6.7%. If the yield remains unchanged, what will be its price one year hence? Assume annual coupon payments.

2.The two-year interest rate is 13.0% and the expected annual inflation rate is 6.5%.

a.What is the expected real interest rate?(Do not round intermediate calculations.Round your answer to 2 decimal places.)

b.If the expected rate of inflation suddenly rises to 8.5%, what does Fishers theory say about how the real interest rate will change?

c.What about the nominal rate?(Do not round intermediate calculations.Round your answer to 2 decimal places.)

3.A 10-year U.S. Treasury bond with a face value of $10,000 pays a coupon of 6.00% (3.000% of face value every six months). The semiannually compounded interest rate is 5.6% (a six-month discount rate of 5.6/2 = 2.8%). What is the present value of the bond?