1. Interest paymont recoived from municipal bonds are tax-exempt, do you think that a investor is willing to accept lower or higher returns for holding a municipal bond compared to other bonds that require tax payment? (4 points) 2. Many bond funds (i.e. funds that their underlying securitos aro composod mainly by bonds) use leverage. What is the impact of the recent increase of interest rate on the profitability of such funds? (5 points). 3. In Dec 2021, the 2 year yicld of UK gilt was 0.5% and in September 2022, the yicld was 4.5%, What is the change of prices (in terms of perocntage change) during that period? ( 5 points) 1. Compared your answer above against the predicted change suggested by the formula of duration (first order approximation). Do you see any difference? (3 points) Why? (3 points)