1. A 10 year loan is being repaid with level monthly payments at the end of each month. The nominal interest rate is 6% compounded monthly. When will the outstanding balance be less than one half of the original loan amount?
2. Maturity Risk Premium
The real risk-free rate is 3.5%, and inflation is expected to be 4% for the next 2 years. A 2-year Treasury security yields 9.5%. What is the maturity risk premium for the 2-year security? Round your answer to two decimal places. _________ %