The following pattern for one-year Treasury bills is expected over the next four years: Year...

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Finance

The following pattern for one-year Treasury bills is expected over the next four years:

Year 1: 5%

Year 2: 6%

Year 3: 8%

Year 4: 11%

a. What return would be necessary to induce an investor to buy a

two-year security

three-year security

four year security

b. Graph the term structure of interest rates for years 1 through 4.

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