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19. The real risk-free rate is expected to remain constant at 3% in the future, a 2% rate of inflation is expected for the next
19. The real risk-free rate is expected to remain constant at 3% in the future, a 2% rate of inflation is expected for the next 2 years, after which inflation is expected to increase to 4%, and there is a positive of the following statements is CORRECT? A. The yield on a 2-year T-bond must exceed that on a 5-year T-bond. B. The yield on a 7-year Treasury bond must exceed that of a 5-year corporate bond. C. The conditions in the problem cannot all be true-they are internally inconsistent D. The yield on a 5-year Treasury bond must exceed that on a 2-year Treasury bond. E. The Treasury yield curve under the stated conditions would be humped rather than have a consistent positive or negative slope. Gehie
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