1. An economist has predicted that during the next 12 years, prices in the US will increase 55%. He expects a further increase of 25% in the subsequent 8 years. Compute the annual inflation rate ,f, for the entire 20 year period?
2. Disequilibrium Corporation issued 10-year bonds two years ago at a coupon rate of 7.8 percent. The bonds make semiannual coupon payments, and currently sell for 108 percent of par value. Calculate the YTM.