2. Term structure of interest rates. suppose that the real rate of interest on a 1-year risk-free bond is constant at 2%. Suppose 1. Calculate what the yield to maturity should be for each bond purchased in 2010, purchased in 2010 maturing in 2015. Sketch the yield curve and label the points 2. Calculate the expected yield on a 3-year bond purchased in 2012 maturing in 2015. that people expect the path for year-on-year inflation as in Table 1. starting with a 1-year bond purchased in 2010 maturing in 2011 up to a 5-year bond Problem set 3 INTERMEDIATE MACROECONOMICS, EcoN 2020, FALL 2017 YURY YATSYNOVICH Year-to-year l ET,% 2010 to 2011 2 2011 to 2012 3 2012 to 2013 4 2013 to 2014 5 2014 to 20156 Table 1: Expected inflation pattern 2. Term structure of interest rates. suppose that the real rate of interest on a 1-year risk-free bond is constant at 2%. Suppose 1. Calculate what the yield to maturity should be for each bond purchased in 2010, purchased in 2010 maturing in 2015. Sketch the yield curve and label the points 2. Calculate the expected yield on a 3-year bond purchased in 2012 maturing in 2015. that people expect the path for year-on-year inflation as in Table 1. starting with a 1-year bond purchased in 2010 maturing in 2011 up to a 5-year bond Problem set 3 INTERMEDIATE MACROECONOMICS, EcoN 2020, FALL 2017 YURY YATSYNOVICH Year-to-year l ET,% 2010 to 2011 2 2011 to 2012 3 2012 to 2013 4 2013 to 2014 5 2014 to 20156 Table 1: Expected inflation pattern