Quantitative Problem: An analyst evaluating securities has obtained the following information. The real rate of interest is 2.7% and is expected to remain constant for the next 5 years. Inflation is expected to be 2.2% next year, 3.2% the following year, 4.2% the third year, and 5.2% every year thereafter. The maturity risk premium is estimated to be 0.1 x (t - 1)%, where t = number of years to maturity. The liquidity premium on relevant 5-year securities is 0.5% and the default risk premium on relevant 5-year securities is 1%. a. What is the yield on a 1-year T-bill? Round your answer to one decimal place. % b. What is the yield on a 5-year T-bond? Round your answer to one decimal place. % c. What is the yield on a 5-year corporate bond? Round your answer to one decimal place. % Grade it Now Save & Continue Many financial decisions require the analysis of uneven, or nonconstant, cash flows. -Select- stock dividends typically increase over time, and investments in capital equipment almost always generate uneven cash flows. The term cash flow (CF+) denotes -Select- cash flows, while payment (PMT) designates -Select- cash flows coming at regular intervals. The present value of an uneven cash flow stream is the sum of the PVs of the individual cash flows. The equation is: PV = CF1 CF2 + + (1+1) (1+1) CFN (1+1) CFt (1+1)* Similarly, the future value of an uneven cash flow stream is the sum of the FVS of the individual cash flows. Many calculators have an NFV key that lets you obtain the FV. However, if your calculator doesn't have a net future value (NFV) key, you can calculate the NFV as follows: NFV NPV (1+ I)N. One can also find the interest rate of the uneven cash flow stream with a financial calculator and solving for the -Select- -Select- key. Quantitative Problem: You own a security with the cash flows shown below. 0 1 700 2 375 3 230 300 using the If you require an annual return of 12%, what is the present value of this cash flow stream? Do not round intermediate calculations. Round your answer to the nearest cent. 1A $