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Please help me to solve these questions. Kindly solve all parts its my request. All are linked. This is money and banking class. Question 1

Please help me to solve these questions. Kindly solve all parts its my request. All are linked. This is money and banking class.

Question 1

1 a. Suppose you own a corporate coupon bond that you plan on selling it next period for $1000. This bond has an annual coupon payment of $100 and a rate of capital gain of 5%. What is the holding period return for this coupon bond?

1 b. What is the price of a consol whose price is $5,000 and has an interest rate of 1%?

1 c. What is the price next year for a coupon bond with a face value of $600 and a coupon rate of 5% that will mature over 5-years and a yield to maturity of

2.5%?

Question 2

2 a Complete the following table

Year

One-year Rate

Liquidity Premium

Multiyear Rate predicted by Expectation Theory

Multiyear Rate predicted by Liquidity Premium theory

1

1%

0%

-

-

2

2%

1%

-

-

3

3%

.5%

-

-

4

4%

.25%

-

-

2 b. Construct a graph highlighting the liquidity premium

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