1. What are the current yields to maturity on 1-year,10-year, and 30- year treas

Question

1. What are the current yields to maturity on 1-year,10-year, and 30- year treasury securities?

2. Using the expectations theory to explain the slope of the yield curve today, do you expect inflation in the future to be higher, lower, or about the same? Why?

3. How do your expectations of future inflation relate to the slope of the yield curve?

4. Find a time in the past when the yield curve was sloping downward. How would you explain the downward sloping yield curve?

5. Find evidence from published data on past rates of inflation in the U.S. to support your explanation of the downward slope of past yield curves. What happened to the rate of inflation after the yield curve was sloping downward?

6. Over the past thirty years, has the yield curve more often sloped upward, downward, or been flat? Explain why you believe this is so and relate your findings to the expectations theory of the term structure of interest rates. Are there other explanations required to account for the tendency of the yield curve to slope a certain way?

Explanation / Answer

current yields to maturity on 30- year treasury securities=2.64%

current yields to maturity on 1-year=0.65%

current yields to maturity on 10-year=1.83%

as on end of May 26,2016

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