U.S. Treasury STRIPS, close of business November 15, 2015:

Maturity

Price

Maturity

Price

November 16

99.471

November 19

95.035

November 17

98.782

November 20

92.570

November 18

96.827

November 21

89.342

a. According to the pure expectations theory of interest rates, how much do you expect to pay for a five-year STRIPS on November 15, 2016? (Do not round intermediate calculations. Enter your answer as a percent rounded to 3 decimal places.)

price

%

b. According to the pure expectations theory of interest rates, how much do you expect to pay for a two-year STRIPS on November 15, 2018? (Do not round intermediate calculations. Enter your answer as a percent rounded to 3 decimal places.)

price

%