Question: Can anyone please help me solve this case study assignment: Joanne is a successful TV actress and you are her financial manager. Lately she is

Can anyone please help me solve this case study assignment:

Joanne is a successful TV actress and you are her financial manager. Lately she is intending to invest in some fixed income securities. Her dilemma is about different levels of interest rates as what factors determine those levels? She is asking you to respond to the following details:

  1. How the time based term effects interest rates and its yield curve?
  2. Assume that market expects the Inflation rate to be 3% next two years, 6% later year and 7% thereafter. The risk free rate is 2% whereas the maturity risk is zero for bonds with maturity in 1 year or less and 0.2% for more than 1 year bonds and then this MRP increases by 0.1% every year thereafter till 15 years. What should be the return on bonds with maturity of 1 year, 10 years and 15 years bonds? Draw and explain why the constructed yield curve is upward-sloping?
  3. Is there any circumstance where the yield curve of AAA rated corporate bonds can be similar to government bonds? Draw the graph to prove your point.

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