5a) Suppose the spot rate on four-year bond is 7 percent and the spot rate on five-year bond is 8 percent. What forward rate is implied on a one-year bond delivered four years from now? 3 Marks b) Define "price risk" and "reinvestment risk. Explain how the two risks offset each other. 2 Marks c) An investor pays $96,000 for a 180-day T-bill with $100,000 face value. What is the yield on the T-bill? 2 Marks d) Define money market and discuss its main role. 3 Marks e) It is the end of 2013, and a $1 dividend is just about to be paid by Macrown limited. In future, the board expected to pay a "once-a-year" dividend of $3, $5, and $7 at the end of 2014, 2015, and 2016 respectively, after which they expect the dividend will grow by a constant 5% p.a. If the rate of return required on Macrown limited shares is k = 14% p.a. What do you estimate using the dividend growth model should be the current cum-div price of their shares? 4Marks f) Describe five comparative differences between ordinary shares and preference shares. 3 Marks g) List five comparative difference between the futures and forward markets. 3 Marks