Question: Analyse the graph below: As the mentioned-above graph is the result of the calculation of one-year Treasury bill rates and liquidity premiums for the next

Analyse the graph below:

YIELD 6.80% 6.60% 6.40% 6.22% 6.47% 6.67% 6.20% 6.00% 5.80% 5.65% 5.60%

As the mentioned-above graph is the result of the calculation of one-year Treasury bill rates and liquidity premiums for the next four years by using the liquidity premium theory and after plotting the current yield curve. Now, you are required to interpret the result as shown in the graph and illustrate it properly.

YIELD 6.80% 6.60% 6.40% 6.22% 6.47% 6.67% 6.20% 6.00% 5.80% 5.65% 5.60% 5.40% 5.20% 5.00% 1 2 3 4 Yield 5.65% 6.22% 6.47% 6.67% TIME

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