1. You are required to research and graph a yield curve for Guaranteed Investment Certificates (GICs) versus mortgage interest rates from ONE (1) financial institution. You may rely on primary research, such as visiting a bank and discussing the rates with staff, or secondary research, such as finding the rates on the internet. (a) Find the current interest rates for GICs and closed mortgages for terms or maturity dates of 6 months, 1 year, 2 years, 3 years, 4 years, and 5 years. Using a spreadsheet program, create a line graph (not a bar chart) with the interest rate on the vertical (Y) axis and time to maturity on the horizontal (X) axis. Include a table of rates by time to maturity. Plot both the GIC and mortgage rates on one graph. In your answer, ensure that you specify the source of the information and the date on which it was obtained. For GIC rates, indicate the deposit range for which the rates are valid, i.e., $5,000 to $50,000. (10 marks) (b) Interpret the results. In your answer, ensure that you explain why the lines in your graph slope positively or negatively. Also explain why you think there is a "spread" between the two rates. In your discussion, consider risk, opportunity cost of capital, liquidity, administration costs, and matching assets and liabilities. (10 marks) 1. You are required to research and graph a yield curve for Guaranteed Investment Certificates (GICs) versus mortgage interest rates from ONE (1) financial institution. You may rely on primary research, such as visiting a bank and discussing the rates with staff, or secondary research, such as finding the rates on the internet. (a) Find the current interest rates for GICs and closed mortgages for terms or maturity dates of 6 months, 1 year, 2 years, 3 years, 4 years, and 5 years. Using a spreadsheet program, create a line graph (not a bar chart) with the interest rate on the vertical (Y) axis and time to maturity on the horizontal (X) axis. Include a table of rates by time to maturity. Plot both the GIC and mortgage rates on one graph. In your answer, ensure that you specify the source of the information and the date on which it was obtained. For GIC rates, indicate the deposit range for which the rates are valid, i.e., $5,000 to $50,000. (10 marks) (b) Interpret the results. In your answer, ensure that you explain why the lines in your graph slope positively or negatively. Also explain why you think there is a "spread" between the two rates. In your discussion, consider risk, opportunity cost of capital, liquidity, administration costs, and matching assets and liabilities. (10 marks)
