1. You find an investor who is willing to purchase a security from you that pays 10,000 starting in three years with a interest rate of 5%. The payment will then grow by 1% every year. What is the price of the security today?

2. John Q. Investor takes a short position on 10,000 shares of Macy's(M), selling at $228.88 per share on June 19. Dividends are estimated at $16 per year paid quarterly, and the last Ex-date was May 25. JQ's broker charges him $600 for the loan of the shares every six months.

JQ covers his position on September 17 at $241.26

JQ's profit on this position is $ _____

JQ's holding period rate of return is _____

The rate of return on the underlying asset is _____