The table below shows market prices for four zero coupon bonds with four different terms: one, two, three and four years.

The bonds all have a face value of $1000

Calculate the yields on the zero coupon bonds and graph the yield curve. What is the shape of the yield curve?

Zero Coupon Bond Prices

Term (years)

Price ($)

1 year 917.43 = 9%

2 year 826.45 = 9%

3 year 731.19 = ?%

4 year 635.52 = ?%