1. Why is the interest rate on a credit card usually higher than the interest rate on an automobile loan? 2. Why is the interest rate on a security sold by a city government usually less than the interest on a security sold by a corporation if both have a comparable default risk? 3. Why is the interest rate on-the-run security usually less than the interest rate on an off-the-run security? 4. Explain what a yield curve shows. What must be held constant among the bonds whose interest rates are shown on a yield curve? 5. Explain why investors might compare the interest rate on a long-term bond with the expected future interest rates on short-term bonds. 6. Describe the shape of the yield curve if investors think that short-term interest rates are likely to increase in the future. Why does the yield curve have this shape? 7. What is a term premium, and why does it exist? 9. Is the term premium constant over time? If not, why not? 10. What is the shape of the yield curve at the start of a recession? At the start of an economic expansion? In the middle of an economic expansion?