The following yields on U.S. Treasury securities were published in The Wall Street Journal on July 14,

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The following yields on U.S. Treasury securities were published in The Wall Street Journal on July 14, 2006:

Term                                                                             Rate
6 months.................................................................... 5.0%
1 year............................................................................ 5.1
2 years.......................................................................... 5.1
3 years.......................................................................... 5.1
4 years.......................................................................... 5.2
5 years.......................................................................... 5.2
10 years........................................................................ 5.3
20 years........................................................................ 5.3
30 years........................................................................ 5.0

Plot a yield curve based on these data. Discuss how each of the three term structure theories discussed in the chapter can explain the shape of the yield curve you plot.

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Essentials of Managerial Finance

ISBN: 978-0324422702

14th edition

Authors: Scott Besley, Eugene F. Brigham

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