Problem #2 Assume that term premia are given with 1+(T-2). Furthermore, assume that investors expect short term interest rates to be constant and equal to the current short term interest rate, nt, which is equal to 5%. i) What is the yield to maturity on a bond that matures in 5 years? i) Now, imagine that term premia increase at all horizons (except for 1) by 1 percentage point How does the yield curve move in this case? ii)Assuming that term premia remain unchanged find the expected short term interest rates in the next four perio ds if we observe that the yield curve is flat up to maturity of 5 iv) Could we see a completely flat yield curve if term premia are increasing and nominal interest rates cannot be negative