questions 1,2,3 please

ences Mailings Review View Help a A E 21 AaBbcc Anbe AaBb AaBbC AaBbD4 1 Normal No Spic. Heading 1 su Title Subtitle Styles Paragraph 1:19) Over the next three years, the expected path of 1 year interest rates is 4, 6 and 9 percent The liquidity premiums for the one year rate are 0%, 5% and 10% for years 1, 2 and 3. 2. Using the above data and the expectations theory of the term structure, calculate what the current rate on a 3-year bond will be b. Using the liquidity premium theory calculate what the current rate on a 3 year bond will be 2.(8) Now, assume the expected one-year rates for the next three years are as follows: Expected Year One Year Bond Rates 1 2% 2 3% 3 4% And the 3 year bond rate is 5% a) Please calculate the liquidity premium for the 3 year bond. b) Assume we know the rate on a two year bond is equal to 5% and the current rate on a one- year bond equals 1%. Calculate the expected rate on a one year bond next year (forward rate) 3.(10) The following balance sheet accounts (in millions of dollars) have been taken from the annual report for a US bank. Arrange the accounts in balance sheet order and determine the value of total assets. Net loans $29.981 Premises (buildings, Innd) $1.188 Savings deposits 3,292 Cash 2,660 NOW accounts 12.816 Equity 3.272 Long-term debt 4,049 Investment securities 5,334 Demand deposits 5.939 Other assets 2,391 Certificates of deposit 12.186 4.(15) The bank you own has the following balance sheet: ORI 2