Please show your work in EXCEL so I can learn from this.

Yield Curve

Look at the current term structure of interest rates. This is available on many web sites Yahoo, Google, MSN Money, wsj.com, federalreserve.gov. One good source is http://online.wsj.com/mdc/public/page/mdc_bonds.html (Links to an external site.). Using the chart wizard in excel, create a line graph of the relationship between time and yield (time on the x axis, yield on the y axis). Show the data you used plus the chart. What is the shape of the yield curve? What implications does this have for the economy? Write a very short paragraph (couple of sentences/bullet points) answering these two questions.

Interest Rates and Inflation

Read the following articles https://www.wsj.com/articles/weak-inflation-continues-to-hold-down-bond-yields-1498906802 and https://www.wsj.com/articles/a-bond-investing-conundrum-returns-1498605010 . The US Federal Reserve as raised short-term interest rates four times beginning in December 2015. Yet the yield on the 10-year Treasury note is lower than it was in 2006. Concern is that low interest rates on US Treasury securities may push investors into riskier assets; on the other hand, if the Federal Reserve tightens too much too fast, that action may raise the threat of a U.S. recession. What is the relationship between short-term and long-term interest rates? What is the role of inflation in determining interest rates? How would you propose to handle this conundrum? Support your position with reasons. We are looking for your thinking on this subject, which may lead to interesting class discussion.

Read the following article http://www.wsj.com/articles/are-negative-rates-backfiring-heres-some-early-evidence-1470677642 (August 8, 2016). Why are countries paying negative interest rates and why are investors accepting negative interest rates?