1.The following is the treasury yield curve information.

Maturity Yield

1Year 5.37%

2 Years 5.47%

3 Years 5.65%

4 Years 5.71%

5 Years 5.64%

10 Years 5.75%

20 Years 6.33%

30 Years 5.94%

Calculate the following

a.2 year treasury rate 2 year from now

b.6 year treasury rate 4 years from now

c.10 year treasury rate 10 years from now

d.20 year treasury rate 10 years from now.

2.Grossnickle Corporation issued 20-year, noncallable, 7.5% annual coupon bonds at their par value of $1,000 one year ago. Today, the market interest rate on these bonds is 5.5%.What is the current price of the bonds, given that they now have 19 years to maturity?

3.Moerdyk Corporation's bonds have a 15-year maturity, a 7.25% semiannual coupon, and a par value of $1,000. The going interest rate (rd) is 6.20%, based on semiannual compounding. What is the bond's price?

4.Anne Lockwood, manager of Oaks Mall Jewelry, wants to sell on credit, giving customers 3 months in which to pay. However Anne will have to borrow from her bank to meet her firm's accounts payable for the interim period. The bank will charge a nominal interest rate of 15%, but with monthly compounding. Anne wants to quote a nominal rate to her customers (All of whom are expected to pay on time) that will exactly cover her financing costs. What nominal annual rate should she quote to her credit customers?

5.Suppose someone offered to sell you a note calling for the payment of $1000 fifteen months from today, for $850. You have $850 in your bank for which you are paid 6.76649% nominal

rate with daily compounding. If you decide not to buy the note, you plan to leave the money in the bank as it is. The note is not risky. You are sure it will be paid on schedule. Should you buy the note?

6.Bond P is a premium bond with a coupon rate of 8.5 percent. Bond D is a discount bond with a coupon rate of 5.5 percent. Both bonds make annual payments, have a YTM of 7 percent, and have 10 years to maturity. What is the current yield for bond P and for bond D? If interest rates remain unchanged, what is the expected capital gains yield over the next year for bond P? Assume a face value of $1000 for bond P and bond D as well.