4. What effect would each of the folleweng events likwly have on the level of nominal interest rates? 1. Househoids dramatically decrease their savings rate. This action well the supply of monery therefore, interest rates will 2. Corporatiens increase their demand for funds following an inciease in investment opportunities. This action weil cause interest tates to 3. The gevernment furs a larger than bepected budget defict. The larger the federal deflet, other things held constant thet the level of interest rates. 4. There is a decisease in mpectad inflution. This exbectation will cause interwat rates to Den. What veld novid you piedict for each of thene two inveatments? Round your enuwers to three decimal plares. What yield would you predict for each of these two investments? Round your answers to three decimal places. 12-year Treasury yield: 96 7ryear Corporate vield: % c. Given the following Treasury bond yield information, construct a graph of the yield curve. Choose the correct graph. The correct graph is di Baied on the information about the corporate bond pravided in part b, calculate vielde and then conatruct a new yield curve oraph that shows both the Treasury and the coporate bonds. Round your ananers to tho decimal plefes. Choose the comet areah. The suereen greph is e. Which part of the veld curve (the left gide or nght side) is tikely to be most valatile over time? short-term rates are volatile than longer-term rates, therefore, the side of the vield curve nould be most volatile over time. 6. Using the Treasury vield information in part c calculate the followng rates using geometric averages (round your answers to three decimal places)? 1. The 1-year rate, 1 year from now 2. The 5 -vear rate. 5 vears from now 3. The 10 vear rate, 10 years from now 4. The 10-year rate, 20 years from now