Suppose today is January 1, 2014, and investors expect the annual inflation rates in 2014 through 2016 to be:

To yield a real risk-free rate, r*, equal to 2 percent, what would the average nominal rate be on a

(a) one-year bond,

(b) two-year bond, and (c)
three-year bond? Assume the bonds are risk-free.

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Year 2014 One-Year Inflation Rate 2015 2.1% 1.5 2016 0.9