please explain and show solutions and answers for all questions

Section 2 (25 marks) Question 1 (13 marks) Answer all parts of the following question. Show your work using the relationships used in class. Yield(DDI'MM./YYYY) The following are Canadian government bond yields. Yield 10f05f19 Yield 10105120 Yield 10106120 12-Month 0.1 0.09 0.10 2-Year 0.31 0.56 0.60 3-Year 0.67 1.13 1.20 a) {2 marks) Under the Expectations Theory, calculate the expected (1-year) interest rates implied by the 10f05f20 yield curve for next year and the year after that; Le. find 5321 and 5022. Liquidity Premium Incorporated uses the Liquidity Premium Theory. 0n l0/05f20 they forecasts that (1-year) interest rates are going to be higher over the next two years at .1996; Le. l.5021 = i3022 = 0-1995- b) (2 marks) What risk premiums are they using? (c) (2 mark) Using the liquidity premiums you have calculated in part (b), update the nominal interest rate forecast for 2022 using the data from the next day (10106120). (d) (2 marks) Nowadays Germany and France in Europe are issuing 10-year bonds of negative yields. Why investors still buying them? Give two reasons