Show all work for full credit. Given the following data on U.S. Agency debt instruments:

• 1-year note yield = 3.42% 7-year note yield = 4.64%

• 2-year note yield = 3.69% 8-year note yield = 4.70%

• 3-year note yield = 4.02% 9-year note yield = 4.86%

• 4-year note yield = 4.02% 10-year note yield = 4.95%

• 5-year note yield = 4.35% 11-year note yield = 4.90%

• 6-year note yield = 4.50% 12-year note yield = 4.99%

And constant premiums of 0, .17%, .41%, .63%, .82%, .98%, 1.12%, 1.22%, 1.30%, 1.37%, 1.42%, 1.45%, 1.47%

a. Calculate the expected liquidity premium yields for a (1,5,2) path.

b. Calculate the expectations yields for a (3,4,1) path.

c. Calculate the real world yield for a (3,5) path.

d. Calculate the expected pure expectations yield for a 3-year note purchased at the beginning of year 5.

e. Calculate the expected preferred habitat yield on a 6-year note purchased at the beginning of year 3.

f. Determine the expectations yield on a 10-year note purchased today.

g. Determine the market yield on a 12-year note purchased today.

h. Describe the yield curve and provide a general interpretation of what implies about the economy.