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Question 1 (25 Marks) a) You observe the following yield curve: Yield to maturity Time to maturity Discuss a possible reason for the shape of

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Question 1 (25 Marks) a) You observe the following yield curve: Yield to maturity Time to maturity Discuss a possible reason for the shape of the yield curve above using the liquidity preference theory. In your answer, describe the theory in detail, and how it may manifest in the above curve. (5 Marks) b) What is fundamental analysis? In the context of the efficient market hypothesis (EMH), discuss whether fundamental analysis is likely to generate abnormal returns and why/why not

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