1. Compute the annual interest payments and principal amount for a Treasury Inflation-Protected Security with a par value of $1000 and a 3 percent interest rate if inflation is 4 percent in year one, 5 percent in year two, and 6 percent in year three.

2. The Joseph Company has a stock issue that pays a fixed dividend of $3.00 per share annually. Investors believe the nominal risk-free rate is 4 percent and that this stock should have a risk premium of 6 percent. What should be the value of this stock?

3.

1. Given the information below, compute annualized returns:

Asset Income Price Initial Time Period

Change Price

A $2 $6 $29 15 months

B 0 10 40 11 months

C 50 70 30 7 years

D 3 -8 20 24 months