Chapter 6, Problem 1P

a.

Summary Introduction

To prepare: The yield curve.

Yield Curve: The graphical representation of expected return, provided by the company to its investors during the years is known as yield curve. It is used to summarize and present the trend in expected returns.

b.

Summary Introduction

To identify: The type of yield curve of given data.

Normal Yield Curve:

A yield curve, which shows the low yield for the short-term bonds and high yield for the long-term debt is known as normal yield curve.

c.

Summary Introduction

To identify: The analysis derived from the graph.

d.

Summary Introduction

To identify: The better option to borrow money for longer than 1 year.