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5. Define Term Structure and how it affects interest rates Rote Date Dec 9 2019 Dec 9 2010 Dec 9 2021 Know 0.055 Expected 0.065

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5. Define Term Structure and how it affects interest rates Rote Date Dec 9 2019 Dec 9 2010 Dec 9 2021 Know 0.055 Expected 0.065 Expected 0.07 Liquidity Premium 2 0 0.002 0.0038 3. Use the data above to construct a Yield Curve ushag the EXPECTATIONS THEORY. Show your results in the blank chart below. b. Use the data above to build a Yield Curve based on the LIQUIDITY PREMIUM THEORY Show your results in the blank chart below. Explain why your results are different. Elaborate on the logic behind the liquidity Premium Theory YIELD CURVES 00 0.063 0.0 0.053 104 Dec 2012 Dec 2010 Dec 2011 Dipectations Theory Luty Theory

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