The following data show the yields on $3-$month Treasury bill, $10-$year Treasury bond and a $10-$

year Baa rated corporate bond.

a$.$ Has the term spread increased or decreased from January to May?

b$.$ So$,$ how must the shape of the yield curve have changed?

Upward sloping

c$.$ Has the risk spread increased or decreased from January to May?

d$.$ Given this change in the term and risk spreads, is the market expecting the economy to

expand or slow down in the near future?

e$.$ Why$/$how can you conclude that?The following data show the yields on $3-$month Treasury bill, $10-$year Treasury bond and a $10-$

year Baa rated corporate bond.

a$.$ Has the term spread increased or decreased from January to May?

b$.$ So$,$ how must the shape of the yield curve have changed?

Upward sloping

c$.$ Has the risk spread increased or decreased from January to May?

d$.$ Given this change in the term and risk spreads, is the market expecting the economy to

expand or slow down in the near future?

e$.$ Why$/$how can you conclude that?