1. Using FRED (or another source), look up the yields on the following risk-free bonds in October 7, 2019: 3- month, 1-year, 2-year, 5-year, and 10-year. Use the end of period, constant maturity rate figures (you can usually see these on the graph if you display the maximum range of dates).

2. Using your data from B.1, construct a yield curve for October 7, 2019. Be sure to clearly label the axes, and the data points.

3. Is the yield curve normal, flat or inverted?

4. According to expectations theory of term structure, what does your yield curve above tell us about expected future short-term interest rates? Explain, citing at least one assumption from the expectations theory of term structure to support your answer. I recommend you use an equation to support your answer (you can compare one- and two-year bonds for simplicity), but you must explain in words how you are arriving at this conclusion using the data you cited in #1~#3

5. Compare your response to #4 if instead of using expectations theory, we used liquidity premium theory to describe the general shape of the yield curve you reported in #2-#3. Be sure to compare/contrast the differences in how each theory interprets the yield curve from #2-#3.

6. Redraw your yield curve from #2 here. You don't need to relabel everything (though you can if you want to), just draw the general shape you showed in #2. Label this yield curve YC1.

7. In mid-October 2019, the Federal Reserve decreased the money supply, creating a liquidity effect in money markets. How does would affect the yield curve? Assume that in the short term, the liquidity effect dominates, but in the medium-to-long-term the other effects dominate the movement in interest rates. Specifically, discuss how changes in expected future interest rates are expected to affect the current rates on short-term and long-term bonds today. I recommend using equations to support your answer.

8. Draw a new yield curve Yield Curve 2, that shows the yield curve after the Fed's actions. This must be consistent with your answer to #7