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1. Suppose that the one year interest rate over the next five years is expected to be 2%, 3%, 4%, 5%, and 5%. In addition, the liquidity premiums for one-year to five-year bonds is 0%, 0.2%, 0.3%, 0.4%, and 0.6%. Calculate the interest rate on the four-year bond. 2. Calculate the present value of a coupon bond where C - 40, F = 1,000, n = 4 and i -.09. 3. Calculate the present value of a consol where C - 80 and i - .05 4. Suppose that a Concordia student wants to take out a five-year car loan for $25,000 at a rate of interest of 3%. Calculate the fixed yearly payment (FP) and the total payments over the course of the loan. 5. What would be the rate of return on a bond bought for $1,000 and sold one year later for $975 with a coupon payment of $25? 6. For each of the following events draw a diagram illustrating the demand and supply of bonds and indicate how the equilibrium price and quantity would be affected: a) Provincial and federal governments in Canada start to run budget surpluses. b) Companies in the oil and gas industry in Canada expect lower profitability on investments. c) Expected inflation decreases. d) People experience an increase in their wealth