ALGONQUIN!` Centre for Continuing* COLLEGE | & Online Learning* 5 .` The table below show's various bond prices at different maturity levels for zero coupon bonds . Based on this information , how would you describe the shape of the yield curve - is it : flat , upward sloping . downward Sloping or there is not Enough information present to make a determination ?" What does this shape mean ?" Note that the bonds all have $ 1 , 000 face value . (10 marks ) maturity Price 350. 24 I 2 300. 70 $60. 38 4 $20. 27 6 .` The current yields for zero -coupon bonds with varying maturities are outlined in the table below .* What is the forward rate from the End of year ? to the end of Year ? ? What does this rate denote ?" ( 5 marks ) Maturity Yield ( Years ) 2 3. 2596 3 3. 65 % 4 4 . 010%} 5 4 . 15% 7 . The nominal rate of interest is 695 and the real rate of interest is 3% . What is the expected inflation rate ? (2 marks ) 3 . Jennifer and Tim are going skiing . Jennifer says to Tim . "I hope the curve of the ski hill corresponds to the slope of the curve that exists between bond prices and yields ." Tim looks puzzled and says , " I don't want to ski uphill . " What do you think of Tim's comment ?" ( 2 marks )