I have solved for the 1 year interest rate in excel by finding the bond price at $1000, equaling 973.52. I know to solve for the 1-year rate by doing 1000/973.52-1 to equal 2.72%

I cannot find the 2, 3, and 4 year interest rates in excel though.

The following table shows the prices of a sample of Treasury strips. Each strip makes a single payment at maturity.

Years to Maturity Price, (% of face value)

1 year; 97.352%

2 year; 93.851

3 year; 90.044

4 year; 85.980

solve for the following using excel :

a.What is the 1-year interest rate?

b. What is the 2-year interest rate?

c. What is the 3-year interest rate?

d.What is the 4-year interest rate?

e.Is the yield curve upward-sloping, downward-sloping, or flat?

• Upward-sloping-correct
• Downward-sloping
• Flat

f.Is this the usual shape of the yield curve?

• Yes-correct
• No