Explain why each of the following statements is True, False, or Uncertain according to economic

principles. Use diagrams where appropriate and show your calculations.

A$2-3.$ Suppose you want to buy a two$-$year government bond that promises to pay $$50$ next year and $$1050$ next

year. If you buy it for less than $$1000$ you will earn a return $($interest rate$)$ of over $5\%.[$Hint: Calculate

the present value of the payments streams assuming a $5\%$ discount rate.$]$