You have been provided with the following information zero coupon bonds with $1000 face value.

Maturity semi annual period Semi - Annual Spot rates

1 4.25

2 4.15

3 3.95

4 3.70

5 3.50

6 3.25

7 3.05

8 2.90

1.Compute the forward interest rates.

2.Graph the yield curve.

3.Explain the factors that account for the shape of the curve.