Please refer to the following list of bonds:

Bond A: T-bills (153 days to maturity)

Bond B: TIPS (7 years to maturity)

Bond C: T-bonds (7 years to maturity)

Bond D: Callable bond (18 years to maturity)

Bond E: Corporate bond (3 years to maturity; YTM 9%)

Bond F: Munis (3 years to maturity; YTM 7%)

(a) The current price of Bond A is $974.6, what is its discount yield?

(b) If you believe that the inflation will rise a lot in the future, is Bond B or C a better investment choice? Explain briefly.

(c) Bond D is callable in 10 years with call premium of 5%. Explain what it means, and a typical situation that the bond will be called.

(d) Bond E has just been downgraded by S&P. Discuss how the supply and/or demand curves of the bond and its yield be affected.

(e) If you are indifferent between Bond E and Bond F, what is the marginal tax rate?