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Please answer the attached questions. Include all work and formulas(if any). I need this done ASAP. within 1 1/2 hours 1) (20 points total) Using

Please answer the attached questions. Include all work and formulas(if any).

I need this done ASAP. within 1 1/2 hours

image text in transcribed 1) (20 points total) Using the links below, answer the following questions: Go to http://research.stlouisfed.org/fred2/data/GS30.txt for data on the 30 US GS Go to http://research.stlouisfed.org/fred2/data/BAA.txt for data on the BAA corporate bond (30 year) a) (5 points) Calculate the risk premium between these two bonds for December, 2007 (beginning of Great Recession) and compare to the risk premium for December 2008 (in the midst of the Great Recession) b) (10 points) Now draw bond supply - bond demand diagrams (side by side) with the baa corporate bond market on the left and the 30 year US GS market on the right. Label as point A, the conditions that existed in December 2007 - be sure to label your bond demand curves accordingly (subscript 12/07). Note that we don't know the prices of these two bonds but we do know what happens to the prices. Now add in the new conditions that existed in December of 2008. We are holding the supply of both bonds constant in this example. c) (5 points) Now explain why your diagram has changed the way it has, being sure to relate your discussion to your answer in part a) 2) (20 points total) Use the links below to answer the following questions: Go to http://research.stlouisfed.org/fred2/data/GS10.txt for data on the 10 year US GS Go to http://research.stlouisfed.org/fred2/data/TB3MS.txt for data on the 3 month Tbill a) (10 points) In the space below, draw a yield curve representing the conditions as of December 2007 along with drawing another yield curve representing the conditions as of December 2008. Be sure to label your yield curves with the date as a subscript. b) (10 points) What has happened to the position and slope of the yield curve and are these results consistent with the three term structure facts? Be sure to refer to each term structure fact and apply it to this example

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