(Compare interest rates on bonds of different maturities.) Treasury securities have different maturities:

i) those with a maturity of 1 year or less from their date of issue are called Treasury bills; ii)

those with a maturity of 2-10 years from their date of issue are called Treasury notes; iii) those with

a maturity of more than 10 years (typically 30 years) from their date of issue are called Treasury

bonds. Treasury bills are discount bonds, while Treasury notes and bonds are coupon bonds.

Go to the website of the Federal Reserve Bank of St. Luis (FRED) (https://fred.stlouisfed.

org/) and download the monthly data for the 3-month Treasury bill (TB3MS), the 10-year Treasury

note (GS10), and the 30-year Treasury bond (GS30) for the period from January 1990 to the most

recent month. (Notice that there is a period when the Treasury stopped selling 30-year bonds, so

no data are available for these months.)

(a) Plot the time series of TB3MS, GS10, and GS30 on a single graph.

(b) Plot the gap between the 10-year note and the 3-month bill. During which periods is the gap

the greatest?

(c) Plot the gap between the 30-year bond and the 10-year note. During which periods is the

gap the greatest?