Total: 40 points. Show all work for full credit (annotate relevant formulae in excel, substantial penalties otherwise) on Excel table rules apply (show no more of the questions. than 1 page of repeated rows, 5-point penalty otherwise) 1. [15 pts] Use the par yield curve below to price the cash flows given in the left-most column. Quote the price to the closest penny Period Maturity (yrs Yield (BEY CF(S) 0.5 10 20 100 -30 50 50 100 0.5 1.5 3.5 7.5 0 8.4 1,000 2. [15 pts] Give and describe the no-arbitrage table to price a 2-year zero coupon loan 2 years from now, accounting for the actions of all parties. For concreteness sake, use the par yield curve in question 1. What is the lockable, annualized rate for such a loan? 3. [10 pts] Briefly describe the expectations hypothesis, and how the liquidity preference theory accounts for the observation that the yield curve tends to be upward sloped, rather than what is predicted by the expectations hypothesis. Total: 40 points. Show all work for full credit (annotate relevant formulae in excel, substantial penalties otherwise) on Excel table rules apply (show no more of the questions. than 1 page of repeated rows, 5-point penalty otherwise) 1. [15 pts] Use the par yield curve below to price the cash flows given in the left-most column. Quote the price to the closest penny Period Maturity (yrs Yield (BEY CF(S) 0.5 10 20 100 -30 50 50 100 0.5 1.5 3.5 7.5 0 8.4 1,000 2. [15 pts] Give and describe the no-arbitrage table to price a 2-year zero coupon loan 2 years from now, accounting for the actions of all parties. For concreteness sake, use the par yield curve in question 1. What is the lockable, annualized rate for such a loan? 3. [10 pts] Briefly describe the expectations hypothesis, and how the liquidity preference theory accounts for the observation that the yield curve tends to be upward sloped, rather than what is predicted by the expectations hypothesis