If the interest rate on a brand-new one-year bond is 5% and people expect the one-year

bond rate to rise to 6% next year, 7% the year after, 8% the year after that, and 9% the

year after that, then:

* the interest rate on a 1-year bond sold today is ____

* What will the interest rates on 2-, 3-, 4-, and 5-year bonds be based on the expectations

hypothesis. Draw the yield curve for these set of bonds.