Figure 5.1: The Graph of an Upward Sloping Forward Rate Curve f(t,T) r(t) | | | | | 0 1 2 3 ...  T Figure 5.1: The Graph of an Upward Sloping Forward Rate Curve

time 0 1 2 3 4 Figure 5.2: An Example of a One-Factor Bond Price Curve Evolution. Actual Probabilities Along Each Branch of the Tree

Contract at time t f(t,T) f(t,T) | | | | t t+1 … T T+1 time Wait to | | | | t t+1 … T T+1 time Wait to borrow r(T) Et(r(T)) Distribution for r(T) Figure 5.3: The Forward Rate f(t, T) versus the Expected Spot Rate Et(r(T)).

Figure 5.4 : An Example of a One-Factor Forward Rate Curve. Actual Probabilities Along Each Branch of the Tree

Figure 5.5: Mean Excess Returns on Zero-coupon bonds of Different Maturities

Figure 5.6: Forecasting Bias of Forward Rates of Different Maturities