Suppose you are a fixed$-$income analyst who adheres to the expectations theory. Your

forecasts indicate that the one$-$year interest rate for the next $10$ years is as follows: $3\%,$

$4\%,5\%,6\%,7\%,8\%,6\%,5\%,3\%,$ and $2\%.$

Based on this information, you are required to calculate the interest rate on a five$-$year bond

and construct the yield curve based on the above information.

Discuss the shape of the yield curve, reflecting on the potential economic reasons for the

yields applicable to the longer$-$term bonds at the far end of the curve. and comment on why

draw the yield curve and comment on it$.$