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1. The current one-year interest rate is 2.0% and the current two-year interest rate is 3.5%%. a.) (2 pts) Is the yield curve normal, inverted,
1. The current one-year interest rate is 2.0% and the current two-year interest rate is 3.5%%. a.) (2 pts) Is the yield curve normal, inverted, or flat? b.) (2 pts) Are future short-term interest rates expected to fall? Explain. c.) (6 pts) What is the 1-yr interest rate expected to be one year in the future? Show work
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