2. Ingrid wants to treat herself and buy a new car when she graduates in 4 years. She estimates that at the end of 4 years, she will need $25,000 to purchase the car that she wants. She has saved $15,000 so far. What interest rate does she need to achieve for a four year investment in order to realize this dream?

3. The current rate of return on a one-year U.S. Government security is 3%. The rate of return on a two-year U.S. Government security is 5%. According to the expectations theory, what is the return on a one-year U.S. Government security purchased one year from today?