Question 1: Why should the forward rate be the unbiased estimator of the future interest rate? (1 mark) Question 2: You are an investor and are looking for an investment opportunity in the fixed-income securities market. You have looked at the current yield curve in Oman and it is found to be upward-sloping. i) Keeping all else constant, should you invest in the money market securities or in the long-term corporate bond right now? Please clearly motivate your answers (1 mark) ii) Assume that you decide to invest in a long-term corporate bond that has a Call feature. Would you accept a lower or higher yield on such a bond (keeping everything else constant)? (1 mark) iii) If the corporate bond (ii) is taxable, how would it affect the yield compared to a tax exempted bond? (1 mark)