5.25%. What is the implied forward rate on a one-year bond, two years from today? 4. You believe interest rates are most likely going to drop, you should a) increase the average duration of your bond portfolio. b) decrease the average duration of your bond portfolio. c) increase the average maturity of your bond portfolio. d) decrease the average coupon rate of your portfolio. 5. Assume the yield on a pure discount bond with a two-year maturity is 5.45% and the yield on a pure discount bond with a one-year maturity is 5.15%. If you purchased the two-year bond, and sold it after one year, what would your one-year return be assuming the pure expectations theory is correct? 6. Calculate the price of an 8% coupon rate, 30-year maturity bond with par value of $1,000 paying 60 semiannual coupon payments of $40 each. Suppose that the yields of similar bonds are l 1% (APR). 7, The price of a 20-year bond with a face value of $1,000, a coupon rate of 6% (payable semi-annually) and a yield to maturity of 7% is 30 Couponx PWF(3.5% , 40periods) t looox pvF (3.SZ,40 p 8. Which of the following bonds would be the least price sensitive to a change in interest ratrs? (Assume all bonds have the same yield to maturity.)