1. An 8.7%, fifteen-year bond yields 6.7%. If the yield remains unchanged, what will be its price one year hence? Assume annual coupon payments. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
2. The two-year interest rate is 13.0% and the expected annual inflation rate is 6.5%.
a. ) What is the expected real interest rate? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
b.) If the expected rate of inflation suddenly rises to 8.5%, what does Fisher's theory say about how the real interest rate will change? What is the nominal rate? (Do not round intermediate calculations. Round your answer to 2 decimal places.)