1. When valuing the cash flows of a conventional bond when can you use either the YTM or Spot rates and get the same results? When would the results be different with one giving an incorrect value?

2. What conclusions can you derive if we have the following Treasury yield values

a) On November 2006 a T-bill rate of 5.07% and 10-year Tnote rate of 4.69%

b) On October 2008 a T-bill rate of 0.68% and a 10-year T-note rate of 3.81%

3)Suppose the minimum investment period is 1 year and 2f1=2.5%. What does this represent? What would be required for this value to be a forecast or expected value?

4) Consider the pricing equations for a 30-year conventional bond with semiannual coupons

a) How many terms would you have in an open-form pricing equation?

b) How could you reduce this to a pricing equation with only two terms?