Question: Problem 3 Consider the following table with Treasury Yield Rates: Time to Maturity Yield Rate (continuously compounded) 3 months 0.15% 6 months 0.21% 1 year

Problem 3 Consider the following table with
Problem 3 Consider the following table with Treasury Yield Rates: Time to Maturity Yield Rate (continuously compounded) 3 months 0.15% 6 months 0.21% 1 year 0.30% 2 years 0.50% 3 years 0.77% 5 years 1.40% 7 years 2.04% 10 years 2.45% 20 years 2.70% Use the data provided to build the yield curve using the cubic spline model. Report the value for the estimated coefficients and write the final expression for the rate as n-1 R(0, t) = a + b(t - ti ) + c(t - t,)2 + V dk (t - th ) } k =1 where (t1 - the)+ = max{t - th, 0} Plot the fitted model and the original yield rates on the same graph

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