1. Consider the one-year interest rates known at the following dates:

year 0: 2%

year 1: 2.5

year 2: 3%

year 3: 3.5%

year 4: 4%

year 5: 4.5%

year 6: 5%

year 7: 5.5%

year 8: 6%

year 9: 6.5%

Using the Expectations Theory, find the interest rates of maturities 1 through 10. Use the arithmetic average method. What do they suggest about the shape of the yield curve?