Question: Question 2. (10 Marks) a. The yield curve is a graph of the relationship between yield to maturity and time to maturity for bonds, which

Question 2. (10 Marks) a. The yield curve is a graph of the relationship between yield to maturity and time to maturity for bonds, which are identical except for time to maturity. Explain two main uses of the yield curve. b. Discuss three basic theories of the term structure. c It is true that recent evidence finds little support for the traditional CAPM. Provide and briefly discuss two examples why this is the case? d If price does not equal value, then assets would be mispriced. Discuss the incentive for investors where price and value are not equal to each other?

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