5. What is the bond equivalent yield of a U.S. Treasury bill with 75 days to maturity quoted at a discount yield of 1.14 percent? Answer in percent to four decimals.

6. A Treasury bill with 131 days to maturity is quoted at 99.042 as a percent of par. What is the effective annual return in percent? Answer to two decimals, carry intermediate calcs. to four decimals.

7. The treasurer of a large corporation wants to invest $20 million in excess short-term cash in a particular money market investment. The prospectus quotes the instrument at a true yield of 5.3 percent; that is, the EAR for this investment is 5.3 percent. However, the treasurer wants to know the money market yield on this instrument to make it comparable to the T-bills and CDs she has already bought. If the term of the instrument is 105 days, what is the discount yield (in percent) on this investment? Answer to two decimals, carry intermediate calcs. to four decimals.

8. Consider the following spot interest rates for maturities of one, two, three, and four years.

r₁=3.1% r₂=4.2% r₃=4.98% r₄=4.6%

What is the one year forward rate two years from now (in percent)? Use the exact formula. Answer to two decimals, carry intermediate calcs. to four decimals.

9. Consider the following spot interest rates for maturities of one, two, three, and four years.

r₁=3.38% r₂=4.26% r₃=3.18% r₄=4.29%

What is the three year forward rate one year from now (in percent)? Use the exact formula. Answer to two decimals, carry intermediate calcs. to four decimals.

10. Consider the following spot interest rates for maturities of one, two, three, and four years.

r₁=3.22% r₂=2.82% r₃=3.8% r₄=4%

If inflation in year 3 (that is, between the end of year 2 and end of year 3) is expected to be 1.68 percent, what real rate (in percent) does this imply for year 3? Use the exact Fisher formula and expectations theory. Answer to two decimals, carry intermediate calcs. to four decimals. Note that it is possible to get a negative real rate.