Given the indicated maturities listed in the following table, assume the following yields for U$.$S$.$ Treasury securities:

Maturity

Yield

$($Years$)$

$(\%)$

$13\mathrm{.}6$

$55\mathrm{.}5$

$105\mathrm{.}5$

$204\mathrm{.}2$

$304\mathrm{.}0$

On the following graph, use the blue points $($circle symbol$)$ to plot the yield curve implied by these interest rates.

Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.

Yield Curve

$0$

$5$

$10$

$15$

$20$

$25$

$30$

$10$

$9$

$8$

$7$

$6$

$5$

$4$

$3$

$2$

$1$

$0$

INTEREST RATE $($Percent$)$

MATURITY $($Years$)$

The graph$$s yield curve is referred to as $\_\_\_\_\_\_\_\_\_$ yield curve.

Based on the yield curve shown, which of the following statements is true?

A market with a yield curve as shown on the graph has higher rates on debt securities that mature within $10$ to $30$ years than those with maturities of less than $1$ to $5$ years.

Interest rates on medium$-$term maturities are higher than rates on long$-$ and short$-$term maturities.

Assume a scenario in which there is no maturity risk premium $($MRP $=0),$ the real risk$-$free rate is expected to remain constant, and the yield curve for U$.$S$.$ Treasury securities is likely to be upward sloping for the next $10$ years. Is inflation expected to increase, decrease, or stay the same over the next $10$ years?

Stay the same

Increase

Decrease