DTU 11 C) I, II and III D) I, II, III and IV Part II. Problems (10 problems, 70 points total) 1. John would like to accumulate $40,000 to buy a BMW in five years. W five years. What amount would he need to deposit now in a deposit account earning 870, compounded quarterly, to accumulate his savings goal? (4 points) 2. There is a 1-year loan of $50,000. Both parties agree on a 6% of rental price of the money on the loan. Both anticipate a 4% inflation rate for the year. How much is the total compensation based on Fisher Effect? How much is the purchasing power loss on principal? (6 points) 3. Based on economists' forecasts and analysis, one-year Treasury bill rates and liquidity premiums for the next four years are expected to be as follows: R1 = 5.8%, E(2r) = 6.4%, L2 = 0.1%, E(3r) = 6.9%, L3 = 0.2%, E(411) = 7.5%, L4 = 0.3% Using the liquidity premium hypothesis, calculate the current rate for four year Treasury securities. (5 points) DTU 11 C) I, II and III D) I, II, III and IV Part II. Problems (10 problems, 70 points total) 1. John would like to accumulate $40,000 to buy a BMW in five years. W five years. What amount would he need to deposit now in a deposit account earning 870, compounded quarterly, to accumulate his savings goal? (4 points) 2. There is a 1-year loan of $50,000. Both parties agree on a 6% of rental price of the money on the loan. Both anticipate a 4% inflation rate for the year. How much is the total compensation based on Fisher Effect? How much is the purchasing power loss on principal? (6 points) 3. Based on economists' forecasts and analysis, one-year Treasury bill rates and liquidity premiums for the next four years are expected to be as follows: R1 = 5.8%, E(2r) = 6.4%, L2 = 0.1%, E(3r) = 6.9%, L3 = 0.2%, E(411) = 7.5%, L4 = 0.3% Using the liquidity premium hypothesis, calculate the current rate for four year Treasury securities. (5 points)