a. Select a correct yield curve based on these data. A Interest Rate (%) 10 15 20 25 Years to Maturity 99965 8 TERM 6 months 1 year 2 years 3 years 4 years 5 years 10 years 20 years 30 years RATE 4.94% 5.39 5.69 5.73 5.90 6.05 6.37 6.48 6.77 H extreff -7NWASOV86 Interest Rate (%) 2896SAMNA 4 74 5 Interest Rate (%) L 10 2. B 15 20 25 Years to Maturity C 15 20 25 10 Years to Maturity ++ 4321ASON86 8 73 Interest Rate (%) pad D ++++ 5 10 15 20 25 Years to Maturity The correct yield curve is -Select- b. What type of yield curve is shown? -Select- -Select- C. The yield curve is abnormal. ell you? The yield curve is upward sloping. The yield curve is flat. d. The vield curve is downward sloping. eded to borrow money for longer than 1 year, would it make sem The yield curve is inverted. I. Even though the borrower reinvests in increasing short-term rates, those rates are still be the rollover risk that may possibly occur if the short-term rates go even higher than the low II. Generally, it would make sense to borrow short-term because each year the loan is renewe III. Generally, it would make sense to borrow short-term because each year the loan is renewe IV. Generally, it would make sense to borrow long-term because each year the loan is renewed V. Differences in yields that may exist between the short-term and long-term cannot be explai -Select- c. What information does this graph tell you? -Select- -Select- d. In general, the rate of inflation is expected to increase and the maturity risk premium is less than zero In general, the rate of inflation is expected to decrease and the maturity risk premium is less than zero. In general, the rate of inflation is expected to increase and the maturity risk premium is greater than zero. The shape of the vield curve depends only on expectations about future inflation, which is expected to increase.. In general, the rate of inflation is expected to decrease and the maturity risk premium is greater than zero. ense for you below the lon long-term ra ewed the inter d. Based on this yield curve, if you needed to borrow money for longer than 1 year, would it make sense for you to borrow short term and renew the loan or borrow long termi? Explan 1. Even though the borrower reinvests in increasing short-term rates, those rates are still below the long-term rate, but what makes the higher long-term rate attractive the rollover risk that may possibly occur if the short-term rates go even higher than the long-term rate (and that could be for a long time!). II. Generally, it would make sense to borrow short-term because each year the loan is renewed the interest rate would be higher. III. Generally, it would make sense to borrow short-term because each year the loan is renewed the interest rate would be lower tv. Generally, it would make sense to borrow long-term because each year the loan is renewed the interest rate would be lower V. Differences in vields that may exist between the short-term and long-term cannot be explained by the forces of supply and demand in each market