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According to a news report: The Federal Reserve made another emergency cut to interest rates on Sunday 3/15/2020, lowering the federal funds rate by 100

According to a news report: The Federal Reserve made another emergency cut to interest rates on Sunday 3/15/2020, lowering the federal funds rate by 100 bps to a range of 0-0.25 percent. The Fed is trying to stay ahead of disruptions and economic slowdown caused by the rapidly spreading coronavirus.

Suppose you observe the following yield rates of US government-issued zero coupon bonds in [Table 1]:

[Table 1 ]

U.S. Treasury

Yields

Maturity

Yield 3/16/2020

Yield (1 month ago)

Yield (1 year ago)

3 Month

0.12%

1.37%

2.24%

6 Month

0.16%

1.28%

2.24%

12 Month

0.21%

1.22%

2.26%

2 Year

0.38%

1.04%

2.05%

5 Year

0.53%

0.89%

1.87%

10 Year

0.78%

0.81%

1.82%

30 Year

1.34%

0.68%

1.65%

Questions:

A. Without drawing the yield curve, comment on the shape of the current yield curve (as of 3/16/2020).

B. Without calculating bond prices, which one bond has the highest bond price (as of 3/16/2020)?

C. Calculate the implied 1-year forward interest rate, one year from now (i.e. f1,2)

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