Assume that yields on U.S. Treasury securities were as follows: TERM RATE 6 months 4.04% 5.45 5.58 1 year 2 years 3 years 4 years 5 years 5.78 5.82 6.10 6.27 6.65 10 years 20 years 30 years 6.80 (%) a. Select a correct yield curve based on these data. A I Interest Rate 8 71 6 5 4 31 2 tun 10 15 20 25 Years to Maturity B Interest Rate (%) 9 8 7 6 5 4 3 21 1 2 5 10 15 20 25 Years to Maturity Interest Rate (%) 9 8 7 6 3 2 5 -1 10 15 20 25 Years to Maturity D Interest Rate (%) 9 8 7 6 5 4 3 2 1 . 1 5 10 15 20 25 Years to Maturity The correct sketch is -Select- v What type of yield curve is shown? -Select- What information does this graph tell you? -Select- 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 term? Explain 1. Even though the borrower romvests 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) 11. Generally, it would make sense to borrow short term because each year the loan is renewed the interest rate would be higher TIL Generally it would make sense to borrow short term because each year the loan is renewed the interest rate would be lower Generelt would make sense to borrow long term because each year the loan is renewed the interest te would be lower Verences in the ment between the short term and long term cannot be led by the forms of poly and death market