eBook Assume that yields on U.S. Treasury securities were follows: RATE 4.57% 5.39 5.56 5.74 TERM 6 months 1 year 2 years 3 years 4 years 5 years 10 years 20 years 30 years 5.84 6.10 6.21 6.62 6.76 a. Select a correct yield curve based on these data A Interest Rate (%) 5 10 20 25 Years to Maturity B Interest Rate (%) 25 10 15 20 Years to Maturity Interest Rate (%) 1 10 20 Years to Maturity D Interest Rate (%) 10 15 20 Years to Maturity The correct yield curve is -Select- b. What type of yield curve is shown? Select v c. 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 barrower reinvests in increasing short-term rates, those rates are still below the long-term rate, but what makes the higher long-term rate attractive is the rallover 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 ta barrow short-term because cach year the loan is renewed the interest rate would be higher. 11. Generally, it would make sense to borrow short-term because each year the loan is renewed the interest rate would be lower. IV. Generally, it would make sense to borrow long-term because each year the loan is renewed the interest rate would be lowe. V. Differences in yields that may exist between the short-term and lang-term cannot be explained by the forces of supply and demand in each market. -Select