1 yr 2 yr 3 5 yr 7 yr 10 yr 20 yr 30 yr 1.00% 2.00% 3.00% 4.00% 5.00% 5.00% 5.50% 4.00% 3.00 4.00 5.00 5.00 5.50 1.00% 2.00%% % % % % 4.00% A). Using the interest rate information, calculate the following in terms of an annualized rate: a) One year rate in two years time from now: a2) Twenty year rate ten years time from now: a3) Four year rate in three years time from now: a4) Three year rate in seven years time from now: B). Re-calculate the numbers from above but incorporate the fact that there is a liquidity premium equal to 20 basis points per year: a) One year rate in two years time from now: a2) Twenty year rate ten years time from now: a3) Four year rate in three years time from now: a4) Three year rate in seven years time from now: C). Plot the yield curve and discuss it. What does it say about future interest rates? How would you explain the difference between the 20-year rate and the 30-year rate? 1 yr 2 yr 3 5 yr 7 yr 10 yr 20 yr 30 yr 1.00% 2.00% 3.00% 4.00% 5.00% 5.00% 5.50% 4.00% 3.00 4.00 5.00 5.00 5.50 1.00% 2.00%% % % % % 4.00% A). Using the interest rate information, calculate the following in terms of an annualized rate: a) One year rate in two years time from now: a2) Twenty year rate ten years time from now: a3) Four year rate in three years time from now: a4) Three year rate in seven years time from now: B). Re-calculate the numbers from above but incorporate the fact that there is a liquidity premium equal to 20 basis points per year: a) One year rate in two years time from now: a2) Twenty year rate ten years time from now: a3) Four year rate in three years time from now: a4) Three year rate in seven years time from now: C). Plot the yield curve and discuss it. What does it say about future interest rates? How would you explain the difference between the 20-year rate and the 30-year rate