TERM	RATE
6 months	4.34%
1 year	5.43
2 years	5.52
3 years	5.78
4 years	5.84
5 years	6.02
10 years	6.24
20 years	6.65
30 years	6.71

9 Interest Rate (%) 8 5 4 3 1 5 -1 10 15 20 25 Years to Maturity B Interest Rate 9 (%) 8 7 5 4 3 2 1 5 -1 10 15 20 25 Years to Maturity 9 8 Interest Rate (%) 6 5 4 3 2 1 5 -1 10 15 20 25 Years to Maturity D Interest Rate (%) 8 7 6 5 4 3 2 1 The correct yield curve is -Select- b. What type of yield curve is shown? -Select- c. What information does this graph tell you? -Select- d. Based on this yield curve, if you needed to borrow money for longer than 1 year, would it make sense for you to borrow short term and renew the loan or borrow long term? Explain. I. Even though the borrower reinvests in increasing short-term rates, those rates are still below the long-term rate, but what makes the higher long-term rate attractive is the rollover risk that may possibly occur if the short-term rates go even higher than the long-term rate and that could be for a long time!). II. Generally, it would make sense to borrow short-term because each year the loan is renewed the interest rate would be higher. III. Generally, it would make sense to borrow short-term because each year the loan is renewed the interest rate would be lower. IV. Generally, it would make sense to borrow long-term because each year the loan is renewed the interest rate would be lower. V. Differences in yields that may exist between the short-term and long-term cannot be explained by the forces of supply and demand in each market. -Select