1a Suppose that the current one year rate (one year spot rate) and expected one year T bill rates over the following three years (i e , years 2, 3, and 4, respectively) are as follows 1 R 1 0 3 , E ( 2 r 1 ) 1 3 , E ( 3 r 1 ) 10 4 , E ( 4 r 1 ) 10 75 Using the unbiased expectations theory, calculate the current (long term) rates for one , two , three , and four year maturity Treasury securities (Round your answers to 3 decimal places (e g , 32 161)) 1b The Wall Street Journal reports that the rate on four year Treasury securities is 1 3 percent and the rate on five year Treasury securities is 2 8 percent According to the unbiased expectations hypotheses, what does the market expect the one year Treasury rate to be four years from today, E ( 5 r 1 ) (Do not round intermediate calculations Round your answer to 2 decimal places (e g , 32 16)) 1c Assume the current interest rate on a one year Treasury bond ( 1 R 1 ) is 1 69 percent, the current rate on a two year Treasury bond ( 1 R 2 ) is 1 85 percent, and the current rate on a three year Treasury bond ( 1 R 3 ) is 1 96 percent If the unbiased expectations theory of the term structure of interest rates is correct, what is the one year interest rate expected on T bills during year 3 ( E ( 3 r 1 ) or 3 f 1 ) (Do not round intermediate calculations Round your answer to 2 decimal places (e g , 32 16)) 1d Calculate the future value of the following annuity streams a $8,000 received each year for 5 years on the last day of each year if your investments pay 6 percent compounded annually b $8,000 received each quarter for 5 years on the last day of each quarter if your investments pay 6 percent compounded quarterly c $8,000 received each year for 5 years on the first day of each year if your investments pay 6 percent compounded annually d $8,000 received each quarter for 5 years on the first day of each quarter if your investments pay 6 percent compounded quarterly (For all requirements, do not round intermediate calculations Round your answers to 2 decimal places (e g , 32 16)) a Future Value b Future Value c Future Value d Future Value

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1a. Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and

1a. Suppose that the current one-year rate (one-year spot rate) and expected one-year T-bill rates over the following three years (i.e., years 2, 3, and 4, respectively) are as follows: ₁R₁ = 0.3%, E(₂r ₁) = 1.3%, E(₃r₁) = 10.4%, E(₄r₁) = 10.75% Using the unbiased expectations theory, calculate the current (long-term) rates for one-, two-, three-, and four-year-maturity Treasury securities. (Round your answers to 3 decimal places. (e.g., 32.161))

1b.The Wall Street Journal reports that the rate on four-year Treasury securities is 1.3 percent and the rate on five-year Treasury securities is 2.8 percent. According to the unbiased expectations hypotheses, what does the market expect the one-year Treasury rate to be four years from today, E(₅r₁)? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

1c.Assume the current interest rate on a one-year Treasury bond (₁R₁) is 1.69 percent, the current rate on a two-year Treasury bond (₁R₂) is 1.85 percent, and the current rate on a three-year Treasury bond (₁R₃) is 1.96 percent. If the unbiased expectations theory of the term structure of interest rates is correct, what is the one-year interest rate expected on T-bills during year 3 (E(₃r₁) or ₃f₁)? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

1d.Calculate the future value of the following annuity streams: a. $8,000 received each year for 5 years on the last day of each year if your investments pay 6 percent compounded annually. b. $8,000 received each quarter for 5 years on the last day of each quarter if your investments pay 6 percent compounded quarterly. c. $8,000 received each year for 5 years on the first day of each year if your investments pay 6 percent compounded annually. d. $8,000 received each quarter for 5 years on the first day of each quarter if your investments pay 6 percent compounded quarterly. (For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))

a. Future Value:

b. Future Value:

c. Future Value:

d. Future Value: