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1. Assume that as of today we have an annualized three-year interest rate of 12 percent, while the current two-year interest rate is 9.5 percent.

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1. Assume that as of today we have an annualized three-year interest rate of 12 percent, while the current two-year interest rate is 9.5 percent. Given this information, estimate the one-year forward rate two years from now and describe how you got the answer. 2. Over the last six months, the short-term yields declined, while long-term yields remained the same. Analysts stated that the shift was due to revised expectations of interest rates. Given the shift in the yield curve, what do you expect has happened to the demand for short-term borrowing? curve and provide an opinion on what you expect with regard to the future economy and rates

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