1. Effects of different compounding periods on future values of $1,000 invested at an 15% nominal interest rate.

Initial Amount	Compounding periods	Effective annual rate	FV at end of 1 year
$1,000	Annually
$1,000	Semiannually
$1,000	Quarterly
$1,000	Monthly
$1,000	Daily (365 days)

2. To illustrate with the simplest case of annual payments, suppose you borrow $24,000 at 10 percent compound annual interest to be repaid over the next 6 years. Equal installment payments are required at the end of each year.

Please determine the annual payment, and amortization schedule.

3. On Jan 1^st, 2000, the real risk-free rate is 2% and is expected to be constant for next 20 years. Inflation is expected to be 7% next year, 5% the following year, and 3% thereafter. The maturity risk premium is estimated to be 0.2*(t -1) % and up to 1%. (t = number of years to maturity).
   1. Please estimate the term structure of US treasury.
   2. Draw the yield curve on Jan 1^st, 2000 and whats the expected yield curve on Corporate bond? (show the trend and position only)