Use the links below to answer the following questions:

Go to

http://research.stlouisfed.org/fred2/data/GS10.txt for data on the 10 year US GS

Go to

http://research.stlouisfed.org/fred2/data/TB3MS.txt for data on the 3 month T-

bill

a) (10 points) In the space below, draw a yield curve representing the conditions as

of December 2007 along with drawing another yield curve representing the

conditions as of December 2008. Be sure to label your yield curves with the date

as a subscript.

b) (10 points) What has happened to the position and slope of the yield curve and

are these results consistent with the three-term structure facts? Be sure to refer to

each term structure fact and apply it to this example.