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5-18. Suppose today is January 2, 2022, and investors expect the annual inflation rates in 2022 through 2024 to be: Year 2022 2023 2024 One-Year
5-18. Suppose today is January 2, 2022, and investors expect the annual inflation rates in 2022 through 2024 to be: Year 2022 2023 2024 One-Year Inflation Rate 2.1% 1.5 0.9 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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