1).Unbiased Expectations TheoryOne-year Treasury bills currently earn 5.10 percent. You expect that one year from now, one-year Treasury bill rates will increase to 5.25 percent. If the unbiased expectations theory is correct, what should the current rate be on two-year Treasury securities?

2).Determinants of Interest Rate for Individual SecuritiesA Corporation's 20-year bonds have an equilibrium rate of return is 7.00 percent. For all securities, the inflation risk premium is 1.53 percent and the real interest rate is 3.28 percent. The security's liquidity risk premium is .33 percent and maturity risk premium is .78 percent. The security has no special covenants. What is the bond's default risk premium?

3).Determinants of Interest Rate for Individual SecuritiesA particular security's default risk premium is 3.50 percent. For all securities, the inflation risk premium is 2.50 percent and the real interest rate is 2.50 percent. The security's liquidity risk premium is 1.00 percent and maturity risk premium is 1.40 percent.

The security has no special covenants. What is the security's equilibrium rate of return?

4).Bond QuotesConsider the following three bond quotes; a Treasury note quoted at 104:20, and a corporate bond quoted at 97.75, and a municipal bond quoted at 104.15. If the Treasury and corporate bonds have a par value of $1,000 and the municipal bond has a par value of $5,000, what is the price of these three bonds in dollars? (Round your answers to 2 decimal places.)

5).Taxable Equivalent YieldWhat's the taxable equivalent yield on a municipal bond with a yield to maturity of 8.50 percent for an investor in the 35 percent marginal tax bracket? (Round your answer to 2 decimal places.)

6).Zero Coupon Bond PriceCalculate the price of a zero coupon bond that matures in 7 years if the market interest rate is 4 percent. (Round your answer to 2 decimal places.)