Question 5 1 pts The real risk-free rate is 2.5 percent. Inflation is expected to be 2.5 percent this year, 4 percent next year, and 5 percent thereafter. The maturity risk premium is estimated to be 0.09x (t-1)%, where t is the number of years to maturity. What is the yield on a 7-year Treasury note? 8.04% O 7.00% 0.63% O 5.54% O 7.54%

Problem 11   Intro You have $22,000 to invest. The spot rate for the euro is $1.16 per euro, while the 180-day forward rate is $1.17 per euro. The six-monthly interest rate in the euro area is 6% and in the U.S. it is 3%.  Attempt 5/10 for 8 pts. Part 1 What is your risk-free rate of return (yield) from exploiting the higher interest rate in the euro area?   Submit

Problem 6-23 Real Returns (LO3) Suppose that you buy a TIPS (inflation-indexed) bond with a 2-year maturity and a (real) coupon of 4.4% paid annually. If you buy the bond at its face value of $1,000, and the inflation rate is 8.60% in each year. a. What will be your cash flow in year 1? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Cash flow b. What will be your cash flow in year 2? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Cash flow c. What will be your real rate of return over the two-year period? Note: Enter your answer as a percent rounded to 1 decimal place.

Question 8 You owe $40,000 in 2 years' time. Annualised yields are 7% at all horizons. There is a 1-year zero-coupon bond, and a 5-year annuity paying $4 per year. To the nearest cent, how much should you invest in the 1-year bond and 5-year annuity to immunise yourself against interest rate risk?