1. (1) Cash flow problem from UNIT 2. To finance construction of a bird feeder, I am sponsoring a $60 lottery which will pay the winner $6 per year for 10 years. If the discount rate is 6 percent, how many dollar lottery tickets must be sold for the lottery to breakeven?

2. (2) Risk premiums on corporate bonds are anticyclical, decreasing during business cycle expansions and increasing during recessions. Explain why.

3.(2)Predict and explain the current economic shutdown will affect the risk premium been Treasury and corporate bonds.

4 (2)The federal government recently guaranteed payment of interest and principal on bonds issued by airline companies. Predict and explain how these guarantees will affect Treasury bond yields.

5. (2) Differences or the spread between yields on corporates and treasuries (or any pair of bonds) are measured in terms of basis points or 1/100 per cent of an interest rate. Thus, if the spread between two bonds is 50 or 50 points, the yields differ by .5 percentage points, such as 4.0 compared to 4.5. What factors might cause spreads to change?