Choose the correct answer following: 1. James Smith, a management trainee at a large Boston-based bank is trying to estimate the real rate of return expected by investors. He notes that the 3-month T-bill currently yields 5 percent and has decided to use the consumer price index as a proxy for expected inflation. What is the estimated real rate of interest if the CPI is currently 1 percent? a. 1% b. 4% c. 9% d. 22% 2. A bond has a $1,000 face value, a market price of $1100, and pays interest payments of $80 every year. What is the coupon rate? a. 6.5% b. 11.5% c. 13.5% d. 8% 3. A $1,000 face value bond currently has a yield to maturity of 7.25 percent. The bond matures in six years and pays interest annually. The coupon rate is 8 percent. What is the current price of this bond? a. $1,100.00 b. $1,035.48 c. $1,200.01 d. None of these answers is correct