A firm wishing to evaluate interest rate behavior has gathered yield data on five U.S. Treasury securities, each having a different maturity and all measured at the same point in time. The summarized data follow.

a. Draw the yield curve associated with these data.
b. Describe the resulting yield curve in part a, and explain the general expectations embodied init.

Transcribed Image Text:

U.S. Treasury security Time to maturity Yield 1 year 10 years 6 months 20 ycars ) years 12.6% 11.2 13.0 11.0 11.4