U.S. Treasury STRIPS, close of business May 15, 2012:

Maturity	Price	Maturity	Price
May 13	99.624	May 16	97.682
May 14	99.218	May 17	96.375
May 15	98.686	May 18	94.686

a.	According to the pure expectations theory of interest rates, how much do you expect to pay for a five-year STRIPS on May 15, 2013? (Do not round intermediate calculations. Enter your answer as a percent rounded to 3 decimal places. Omit the "%" sign in your response.)

Price: %

b. According to the pure expectations theory of interest rates, how much do you expect to pay for a two-year STRIPS on May 15, 2015? (Do not round intermediate calculations. Enter your answer as a percent rounded to 3 decimal places. Omit the "%" sign in your response.)

Price: %