A. Your parents will retire in 29 years. They currently have $270,000 saved, and they think they will need $2,400,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? Round your answer to two decimal places.

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B. Interest rates on 4-year Treasury securities are currently 6.5%, while 6-year Treasury securities yield 7.35%. If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now? Calculate the yield using a geometric average. Do not round intermediate calculations. Round your answer to two decimal places.

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C. Due to a recession, expected inflation this year is only 3.75%. However, the inflation rate in Year 2 and thereafter is expected to be constant at some level above 3.75%. Assume that the expectations theory holds and the real risk-free rate (r*) is 3.5%. If the yield on 3-year Treasury bonds equals the 1-year yield plus 1.5%, what inflation rate is expected after Year 1? Round your answer to two decimal places.

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D. A company's 5-year bonds are yielding 10% per year. Treasury bonds with the same maturity are yielding 4.8% per year, and the real risk-free rate (r*) is 3.05%. The average inflation premium is 1.35%, and the maturity risk premium is estimated to be 0.1 (t - 1)%, where t = number of years to maturity. If the liquidity premium is 0.9%, what is the default risk premium on the corporate bonds? Round your answer to two decimal places.

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