There are two parts to this assignment. You will create a yield chart in Excel, and then answer questions based on the yield chart in a Word document.**Part I: Excel**Please download the

Week_01_Problems.xls spreadsheet.

Use the following data to complete each yield curve as follows: **Required:**

- Using the Yield Curve 1 sheet, adjust the Feb. 00 column and make the 5 year investment 4%; make the 10 year investment 6% and the 20 year investment 8%.
- Using the Yield Curve 1 Sheet, adjust the Feb. 05 column and make the 5 year investment 8%, the 10 year investment 6% and the 20 year investment 4%.
- On the Yield Curve 2 sheet, you will be preparing your own yield curve. Conduct research and locate at least three interest rates of different maturities on certificates of deposit. You may locate this information on a bank’s website or your local bank.

**Part II: Word **After completing your yield curves in Excel, answer the following questions in a Word document.Required:

- Describe the yield curve for Feb 00. What type of curve slope does it have and what does it illustrate about rates and maturities?
- Describe the yield curve for Feb 05. What type of curve slope does it have and what does it illustrate about rates and maturities?
- Describe the yield curve in Yield Curve 2 that you completed with your researched material. What type of curve slope does it have and what does it illustrate about rates and maturities?
- Based on the Yield Curve 2 sheet, calculate a mock investment in which $100,000 is invested in at least two Certificates of Deposit of at least two maturities. Justify your choices based on this week’s studies and apply concepts from the Determinant of Interest Rates concept. Assume that the same considerations apply here as the debt securities that were discussed in the example.

## Yield Curve

1 1%

5 20Name: | |||||

Term to Maturity in Years | Feb-00 | Feb-0 | 5 | ||

0.5 | 3.00% | 8.70% | |||

3. | 20 | 9.40% | |||

3.63% | 9.20% | ||||

10 | 3.91% | 9.00% | |||

4.31% | 8.00% |

Yield Curve 1

0.5 0.51 1

5 5

10 10

20 20

Feb-00

Feb-05

Years to Maturity

Interest Rate (%)

U.S. Treasury Bond interest Rates on Different Dates

0.03

0.087

0.032

0.094

0.0363

0.092

0.0391

0.09

0.0431

0.08