Briefly discuss the general shape of yield curve

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1. Using the Wall Street Journal or Barron’s, find the bond yields for Treasury securities with the following maturities: three months, six months, one year, three years, five years, 10 years, 15 years, and 20 years. Construct a yield curve based on these reported yields, putting term-to-maturity on the horizontal (x) axis and yield-to-maturity on the vertical (y) axis. Briefly discuss the general shape of your yield curve. What conclusions might you draw about future interest rate movements from this yield curve?

2. Explain what will happen to a bond’s duration measure if each of the following events occur (provide an explanation for only those events listed below):

The yield-to-maturity on the bond falls from 8.5% to 8%.

The bond gets one year closer to its maturity.

Market interest rates go from 8% to 9%.

Reference no: EM13826291

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