Question B5 (a) A T-bill with face value $10,000 and 97 days to maturity is selling at a bank discount bid yield of 2.8% and ask yield of 2.5%. Calculate the purchase price of the bill and the corresponding bond equivalent yield. (4 marks) (b) The following information shows the interest rates with different maturities observed today: Maturity (Years) 1 2 3 4 Rates 4.5% 6.0% ???? 7.2% Assuming Expectation Theory is held, calculate: (i) 2-year forward rate two years from now. (ii) 3-year interest rate today if the 1-forward rate two years from now is 8%. (2 marks) (c) "Term structure of interest rates is more likely to be upward sloping under Maturity Preference Theory." Explain. (2 marks)