1. Suppose the unbiased expectations theory is true. Further, we observe yields on U.S. Treasury securities today and see the following: Which of the following is/are true?
a. The 2-year security has a 2 percent liquidity premium.
b. The 3-year security has a 1 percent liquidity premium.
c. We expect yields to rise in the future.
d. We expect yields to fall in the future.
2. Julie has $2,000 in her bank right now. In addition, she will be making 4 more deposits of $1,000—at the end of each of the next 4 years. If the bank pays 6% per year, compounded annually, how much will Julie have in her account at the end of 4 years? (to the nearest dollar)
a. $ 6,900
b. $ 4,375
c. $ 6,375
d. $ 6,586
Please show the process