Question $4$

Consider the following information on the yields of Government of Canada bonds on October

$31,2022$ at $18$:$15$ GMT $+0$

$($a$)$ Use this information to draw the yield curve and comment on the shape of the yield curve

$($b$)$ One statistic of interest in the analysis of the term structure of interest rates is the spread

i$.$e$.$ the yield of a longer$-$term bond minus the yield of a shorter$-$term bond. For example,

for the data provided, the spread of a $10-$year bond vs$.$ a $2-$year bond is $3\mathrm{.}270\%-3\mathrm{.}943\%=$

$-0\mathrm{.}673=(-0\mathrm{.}673100)=-67\mathrm{.}3$ basis points. Under normal circumstances would you

expect the spread to be positive or negative? Briefly explain