Be/lo/w i/s a ta/bl/e o/f p/ric/es f/or ze/ro-cou/pon gove/rnm/ent-iss/ued/ b/on/ds. Assu/me/ fo/ simplici/ty th/at/ all /b/nds have/ a fac/e val//ue of/ 1000 USD a/nd that all/ bon/d p/ri/ces a/re li/ted in/ the sa/me US d/ollar currency.

M/at/u/rity	US/ go/vern/me/nt b/onds
3 months	$996.000
6 months	$994.000
1 year	$990.00
2 years	$985.00

De/termin/e the term-/struct/ure of spo/t rates /and s//ketch a yield// curv/e (sk/etch /nee/d //not/e precise). Com/ment/ on /which /cond/ition the yie/ld c/urve thro/gh ti/me is in (cont/ango, b/ack/warda/tion, etc).

A Eur/opean call opt/ion ha.s a st.rik.e pr.i.ce of $993.75 on. th.e 6 month U.S. go.ve.rnme.nt .bon.d g.iven in th.e tab.le a.bove. W.hat wo.uld .be th.e ann.u.al.ized ra.te of r.etur.n f.or a pers.on who bou..ght .the opti.on. for $1 and th.en exer.cis.ed th.e op.io.n 3 mo.n.ths la.ter an.d aft.er t.he 6 mo.n.h an.nua.li.zed s.po.t r.a.te f.ell t.o 1%?