You have been hired by Risky Ventures, Inc., as a consultant to help them analyze interest rate...

You have been hired by Risky Ventures, Inc., as a consultant to help them analyze interest rate trends. They are initially interested in determining the historical relationship between long and short-term interest rates. The biggest task you must immediately undertake is collecting market interest-rate data. You know the best source of this information is the Web.

1. You decide that your best indicator of long-term interest rates is the 30-year U.S. Treasury note. Your first task is to gather historical data. Go to www.federalreserve.gov/releases/ and click “H.15 Selected Interest Rates, Historical data.” The site should look like Figure 9. a. Click on “Historical data.” Scroll down to “U.S. Government securities/Treasury constant maturities/30 year.” Scroll over to the right and click on “annual.”

FIGURE 9 Federal Reserve Board Web Site

b. While you have located an accurate source of historical interest rate data, getting it onto a spreadsheet will be very tedious. You recall that Excel will let you convert text data into columns. Begin by highlighting the two columns of data (the year and rate). Right-click on the mouse and choose COPY. Now open Excel and put the cursor in a cell. Click PASTE. Now choose DATA from the tool bar and click on TEXT TO COLUMNS. Follow the wizard (Figure 10), checking the fixed-width option. The list of interest rates should now have the year in one column and the interest rate in the next column. Label your columns. Repeat the above steps to collect the 1-year interest rate series. Put it in the column next to the 30-year series. Be sure to line up the years correctly and delete any years that are not included in both series.

c. You now want to analyze the interest rates by graphing them. Again highlight the two columns of data you just created in Excel. Click on the charts icon on the tool bar (or INSERT/CHART). Select scatter diagram and choose any type of scatter diagram that connects the dots. Let the Excel wizard take you through the steps of completing the graph. (See Figure 11.)

FIGURE 10 Excel Spreadsheet with Interest Rate Data

FIGURE 11 Excel Graph of Interest Rate Data