1. Suppose the rate of return on a 10-year T-bond is 6.90%, the expected average rate of inflation over the next 10 years is 2.0%, the MRP on a 10-year T-bond is 0.9%, no MRP is required on a TIPS, and no liquidity premium is required on any Treasury security. Given this information, what should the yield be on a 10-year TIPS? Disregard cross-product terms, i.e., if averaging is required, use the arithmetic average. a. 3.04% b. 3.92% c. 4.00% d. 4.60% e. 4.76%
2. In 2015, Kelly calculated a ($18,821) NOL on her Form 1045, Schedule A. She wants to carry her 2015 NOL back to 2013. In 2013, Kelly filed single, had no dependents, took the standard deduction, and her AGI reported on his Form 1040, line 37 was $49,216. Kelly's 2013 income tax was $5,735 and her 2013 self-employment tax was $5,311. Using Form 1045, pages 1 and 2, carry back Kelly's 2015 NOL to 2013 and calculate her refund. $2,610 $3,125 $4,142 $5,555