Question

Hello,
I am having a lot of trouble trying to solve my homework question. The question details

are listed below:

The following table shows the prices of a sample of Treasury strips. Each strip makes a single payment at maturity.

Years to Maturity Price (% of face value)

1 98.152%

2 94.651

3 90.844

4 86.780

a. What is the 1-year interest rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

b. What is the 2-year interest rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

c. What is the 3-year interest rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

d. What is the 4-year interest rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

e. Is the yield curve upward-sloping, downward-sloping, or flat?

f. Is this the usual shape of the yield curve?

homework question