Question: The following pattern for one - year Treasury bills is expected over the next four years: Year 1 : 4 . 5 % Year 2

The following pattern for one-year Treasury bills is expected over the next four years:
Year 1: 4.5%
Year 2: 4.0%
Year 3: 3.5%
Year 4: 3.0%
a. What return would be necessary to induce an investor to buy a
i. two-year security
ii. three-year security
iii. four-year security
b. What is the shape of the yield curve?

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