Question: 2) Short term (one year) interest years over the next 6 years will be 0.6, 1.1, 1.8, 2, 1.6, and 5.1. Assume that the investors

2) Short term (one year) interest years over the next 6 years will be 0.6, 1.1, 1.8, 2, 1.6, and 5.1. Assume that the investors prefer holding short-term bonds so that liquidity premium of 10 basis points is required for each year of bond maturity. Using the liquidity premium theory, what will be the interest rates on 5-year bonds?

3) Debt issued by Drumpt corporation currently yields 11%. A municipal bond of equal risk currently yields 6%. At what marginal tax rate would an investor be indifferent between the two bonds? Please input the answer in decimal format.

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