Problem $1 (4 points) The real rate of interest is currentiy 3 percent. The inflationary expectation is 8 percent. The risk premium is 2 percent. a. What is the risk-free rate of interest? b. What is the nominal rate of interest? Problem i2 (3 points) Fullerton's Company bonds are currently selling for $1,000 per $1,000 par-value bond. The bonds have an 88 coupon interest rate and will mature in 10 years. What is the yield to maturity percent lor the required rate of return)? Problem *3 (3 points) A firm with a beta value of 2 has a required return of If the risk-free rate 105 percent and the market rate of return 1s10 percent. 5+2(10%5%) 7=(5)=35% Problem #4 (3 points) What is the APPRoxItATE yield to maturity of a 10 year, 8 percent, $1,000 par value bond selling at $1,1502 Problem \&5 (10 pointa) Happy Hour Finaneial Company must choose between two asset purchases. The annual zate of return and related probabilitios given below summarizes the flim's analysis. For each asset, compute a. the expected rate of return b. the standard deviation of the expected return c. the coefficient of vartation for each asset d. Which asset should fappy Hour Einancial select