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2-11. Interest rate determination) You work at the central bank and have been to estimate appropriate nominal interest rates for several different Treasury bonds with
2-11. Interest rate determination) You work at the central bank and have been to estimate appropriate nominal interest rates for several different Treasury bonds with different maturity dates. You have been told to employ the stable real risk-free interest of 3.5% and steady inflation rate of 2.5%. There is not any default risk any liquidity risk there is no liquidity-risk premium. The dependent upon how many years the bond has to maturity ade as follows asked or maturity-risk premiums, I MATURITY-RISK PREMIUM NOMINAL RATE OF INTEREST BOND MATURES IN YEARS 0-1 1-2 2-3 3 4 IN PERCENT 0.05 0.30 0.60 0.90 IN PERCENT Based on this information, what should the nominal rate of interest on Treasury bonds maturing in 0-1 year, 1-2 years, 2-3 years, and 3-4 years be
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