3 Yield curve graph 1. Use the GC (Graph Curve) function in Bloomberg to plot the Italy yield curve. Use the commands at the right of the screen to add the Germany yield curve. Show that graph. 2. At the bottom of the graph is the different between the Italy and the Germany yields. What do Italians call this spread? (hint: it's in the introduction if you haven't read it yet.) 3. Use the GC function to add to the existing graph the US Treasury yield curve. How do US Treasury yields compare to Germany yields and Italy yields? Show that graph. 4. Do you think the higher yields in the US reflect a higher risk of default? 5. Compare the CDS spreads with the spreads obtained using the yield curve (you could plot the CDS for Italy and Germany using the GC function.) 6. Is there an arbitrage opportunity? 3 Yield curve graph 1. Use the GC (Graph Curve) function in Bloomberg to plot the Italy yield curve. Use the commands at the right of the screen to add the Germany yield curve. Show that graph. 2. At the bottom of the graph is the different between the Italy and the Germany yields. What do Italians call this spread? (hint: it's in the introduction if you haven't read it yet.) 3. Use the GC function to add to the existing graph the US Treasury yield curve. How do US Treasury yields compare to Germany yields and Italy yields? Show that graph. 4. Do you think the higher yields in the US reflect a higher risk of default? 5. Compare the CDS spreads with the spreads obtained using the yield curve (you could plot the CDS for Italy and Germany using the GC function.) 6. Is there an arbitrage opportunity