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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