Question 10 (1 point) You are planning to invest in 8% annual coupon bonds that are callable and have 15 years left until maturity. Then bonds pay interest annually. The bonds have a par value of $1,000, and their current market price is $900. The bonds may be called in seven years at a call price of $1,080 Calculate the current yield a) 9.3% Ob) 10.9 C) 8.9% d) 8.0% e) 10.0% Question 9 (1 point) Suppose that the real risk-free rate is a constant 2 percent per year and investors demand a maturity risk premium equal to MRP = [0.1t]%, where t is the number of years to maturity. Also suppose that inflation is expected to be 1.0% in year 1, 2.0% in year 2, and 3.0% per year thereafter. The liquidity premium on all corporate bonds is 0.5% and the default risk premium on BBB rated bonds is 0.2% Calculate the yield on a 3 year BBB Corporate bond a) 4.8% b) 5.0% c) 6.0% d) 4.3% e) 4.0% Question 8 (1 point) Suppose that the yield on a 1-year Treasury is 2 percent, the yield on a 2-year Treasury is 4 percent, and the yield on a 3-year Treasury is 6 percent The real risk-free rate is a constant 2 percent per year and MRP = 0 Calculate the expected interest rate on a 1 year Treasury security, one year from now. a) 2% b) 4% c) 6% d) 8%