A bond analyst observes the following rates on zero coupon bonds:

Maturity	Rates
1 month	0.50% p.a.
3 month	0.75% p.a.
6 month	1.00% p.a.
1 year	1.25% p.a.
2 year	1.75% p.a.
5 year	2.50% p.a.

 

a) What is a yield curve? 

b) What type of yield curve does the bond analyst observe?

c) What do you think the yield curve indicates about the market expectation of future interest rate movement (link your discussions to the term structure of interest rate theories)?