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Federal Reserve decided to sell 1-year and 12-year Treasury securities and buy 5-7 year Treasury securities in order to shift business investment across maturities and

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Federal Reserve decided to sell 1-year and 12-year Treasury securities and buy 5-7 year Treasury securities in order to shift business investment across maturities and sectors of the economy. What would be shape of yield curve as a result of this move by Fed? Explain this yield curve using appropriate theory of term structure. (8 points) Federal Reserve decided to sell 1-year and 12-year Treasury securities and buy 5-7 year Treasury securities in order to shift business investment across maturities and sectors of the economy. What would be shape of yield curve as a result of this move by Fed? Explain this yield curve using appropriate theory of term structure. (8 points)

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