Yield curves yields on U.S Treasury securities were as follows:                                                 Term                     Rate                                                 6 months             5.1%                                                 1 years                 5.5                                                 2 years                 5.6                                                 3 years                 5.7                                                 4 years                 5.8                                                 5 years                 6.0                                                 10 years               6.1                                                 20 years               6.5                                                 30 years               6.3 Plot a yield curve based on these data What type of yield curve is shown What information does this graph tell you? Based on this yield curve, if you needed to borrow money for longer then 1 year, would it make sense for you to borrow short term and renew the loan or borrow long term?Explain.

Intermediate Financial Management (MindTap Course List)
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ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
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Problem 4P: Determinant of Interest Rates The real risk-free rate of interest is 4%. Inflation is expected to be...
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Yield curves yields on U.S Treasury securities were as follows:

                                                Term                     Rate

                                                6 months             5.1%

                                                1 years                 5.5

                                                2 years                 5.6

                                                3 years                 5.7

                                                4 years                 5.8

                                                5 years                 6.0

                                                10 years               6.1

                                                20 years               6.5

                                                30 years               6.3

  1. Plot a yield curve based on these data
  2. What type of yield curve is shown
  3. What information does this graph tell you?
  4. Based on this yield curve, if you needed to borrow money for longer then 1 year, would it make sense for you to borrow short term and renew the loan or borrow long term?Explain.
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