A 30-year maturity bond has a 5.6% coupon rate, paid annually. It sells today for $876.17. A 20-year maturity bond has a 5.1% coupon rate, also paid annually. It sells today for $896.9. A bond market analyst forecasts that in five years, 25-year maturity bonds will sell at yields to maturity of 6.6% and 15-year maturity bonds will sell at yields of 6.1%. Because the yield curve is upward sloping, the analyst believes that coupons will be invested in short-term securities at a rate of 7.1%. A. Calculate the (annualized) expected rate of return of the 30-year bond over the 5-year period.
B. What is the (annualized) expected return of the 20-year bond?

Costco wholesale corporation operates membership warehouses selling food, appliances, consumer electronics, apparel and other household goods at 471 locations across the u.s. as well as in canada, mexico and puerto rico. as of its fiscal year-end 2005, costco had approximately 21.2 million members. selected fiscal-year information from the company's balance sheets follows. ($ millions). selected balance sheet data 2005 2004 merchandise inventories $4,015 $3,644 deferred membership income (liability) 501 454 (a) during fiscal 2005, costco collected $1,120 cash for membership fees. use the financial statement effectstemplate to record the cash collected for membership fees. (b) in 2005, costco recorded $46,347 million in merchandise costs (that is, cost of goods sold). record thistransaction in the financial statement effects template. (c) determine the value of merchandise that costco purchased during fiscal-year 2005. use the financial statementeffects template to record these merchandise purchases. assume all of costco's purchases are on credit.