4. Currently, the one year spot rate is 8 percent per year and the two year spot rate is 7 percent per year. What is the expected one year spot rate starting one year from today under the Pure Expectations Theory? (a) about 6 percent (b) about 7.5 percent (c) about 8.5 percent (d) about 9 percent 5. You bought a stock for S100 one year ago. Today you received S6 in dividends and then sold the stock for S108. In this transaction, the capital gains yield on this stock is and the dividend yield is. (a) 6 percent; 8 percent (b) 8 percent; 6 percent (c) 14 percent; 6 percent (d) 14 percent; 8 percent 6. Turnip Corporation has issued new preferred stocks. The issue will pay a S10 annual dividend in perpetuity, beginning five years from today. (The first dividend will be paid fiver years from today, i.e., at t-5) If the market requires a 10 percent return on this preferred stock, how much does a share of the Turnip's preferred stock cost today? (a) S37.9 (b) S62.1 (c) S68.3 (d) S100