2. (8 marks) Alberto Inc. just paid its annual dividend of $2.00 per share. The firm is expected to grow at a rate of 10 percent for the next two years and then at 6 percent per year thereafter. The required return of Alberto Inc. is 12%. Find the expected price of the stock in one year, P1.
3. (8 marks) The table below is the YTM of U.S. Treasuries with different maturities on April 1, 2020.

1 yr.	2 yr.	3 yr.	5 yr.	7 yr.
0.16%	0.23%	0.28%	0.37%	0.51%

1. What is the expected two-year rate in three years according to the Pure Expectations Theory? (3 marks)
2. What is an inverted yield curve? Give one reason that may cause the yield curve to invert. (5 marks)