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Which of the following is consistent with the pure expectations theory of the yield curve? Check all that apply. A downward-sloping yield curve suggests that the market thinks interest rates in the future will be lower than they are today. A flat yield curve suggests that the market thinks interest rates in the future will be higher than they are today. An upward-sloping yield curve suggests that the market thinks interest rates are going to be lower in the future than they are today. An upward-sloping yield curve suggests that the market thinks interest rates are going to be higher in the future than they are today. Hilary would like to invest a certain amount of money for two years and considers investing in a one-year bond that pays 6 percent and a two-year bond that pays 8 percent. Hilary is considering the following investment strategies: Strategy A: In the first year, buy a one-year bond that pays 6 percent. Once that bond matures, buy another one-year bond that pays the forward rate. Strategy B: In the first year, buy a two-year bond that pays 8 percent annually. If the one-year bond purchased in year two pays 12 percent, Hilary will choose Which of the following describes conditions under which Hilary would be indifferent between Strategy A and Strategy B? The rate on the one-year bond purchased in year two pays 10.038 percent. The rate on the one-year bond purchased in year two pays 10.440 percent. The rate on the one-year bond purchased in year two pays 8.532 percent. The rate on the one-year bond purchased in year two pays 9.436 percent. Suppose Green Energy Corporation is planning to massively expand its manufacturing facility and will issue 15 -year corporate bonds to obtain funding for the project. Prior to issuing the corporate bonds, Green Energy Corporation must determine the yield that it must offer to successfully sell the debt securities. Upon further analysis of the key characteristics used to determine the appropriate yield of a bond, Green Energy Corporation learns the following: 1. The annualized yield on a risk-free 15 -year Treasury bond is 7 percent. 2. A 2 percent credit risk premium is needed to compensate investors for credit risk. 3. A 0.3 percent liquidity premium is needed to compensate investors due to the low liquidity of the bonds. 4. A 0.2 percent tax adjustment is needed to compensate investors for a difference in tax status. What is the appropriate yield to be offered on the corporate bonds? 5.50% 8.90% 9.50% 9.80%