1.)

Suppose that the current 1-year rate (1-year spot rate) and expected 1-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows:

₁R₁ = 3%, E(₂r₁) = 4%, E(₃r₁) = 4.5%, E(₄r₁) = 4.85%

Using the unbiased expectations theory, calculate the current (long-term) rates for 1-, 2-, 3-, and 4-year-maturity Treasury securities. (Round your answers to 2 decimal places.)

Year	Current (Long-term) Rates
1		%
2		%
3		%
		4 % 2.) Present Value of an Annuity Due If the present value of an ordinary, 3-year annuity is $6,500 and interest rates are 10 percent, what's the present value of the same annuity due?