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Use the following time line to find the missing future value in year 4: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $750 $650 $950 $R $850 $550 Note: Your grandmother tells you that she has $5,500 today. She promises to make payments to you based on her time line above. Gram observes the term structure of interest rates over the life of her promise to you: One Year Rate: 2.5% Two Year Rate: 2.7% Three Year Rate: 3.1% Four Year Rate: 3.3% Five Year Rate: 3.5% Six Year Rate: 3.8% Identify the slope of the yield curve, explain your answer, and state which type of economy is consistent with the shape of the yield curve. Compute the amount gram expects to give you in year 4 (you will have to select a rate from the yield curve, so justify your selection in one sentence). Use the following time line to find the missing future value in year 4: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $750 $650 $950 $R $850 $550 Note: Your grandmother tells you that she has $5,500 today. She promises to make payments to you based on her time line above. Gram observes the term structure of interest rates over the life of her promise to you: One Year Rate: 2.5% Two Year Rate: 2.7% Three Year Rate: 3.1% Four Year Rate: 3.3% Five Year Rate: 3.5% Six Year Rate: 3.8% Identify the slope of the yield curve, explain your answer, and state which type of economy is consistent with the shape of the yield curve. Compute the amount gram expects to give you in year 4 (you will have to select a rate from the yield curve, so justify your selection in one sentence)

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