We see the following yield curve for discount, or zero-coupon, bonds.

maturity yield to maturity
1 year 6%
2 years 7%
3 years 8%

(a) if the fair price for a four-year annuity paying $100 per year is $334.57, what is the yield to maturity on a four-year zero-coupon bond?
(b) suppose that you wish to lock in a loan in year 2 to be repaid in year 3 (cash received in year 2 and interest plus principal returned in year 3). the amount of the loan is $20 million. what pattern of discount bond holdings could you use to construct this loan now?

The domestic variety is cheaper because there is no import duties or no charges imposed on it because of the import from other countries.

Explanation:

A country produces a lot of goods and services in it's own economy using the resources which are present in it's own country. But the goods and the services that are not available in the country but are demanded by the citizens of the country are imported from other countries.

When these goods and services are imported from other countries then there is an imposition of duties or taxes on those goods making the charges of those goods high. With the transportation of the goods from one country to the other, then also some cost is imposed on the good. This increases the cost or the price of the good.