7. The "yield curve" shows the relationship between bonds' maturities and their yields A. True B. False 8. Suppose the real risk-free rate is 3.50% and the future rate of inflation is expected to be constant at 2.20%. What rate of return would you expect on a 1-year Treasury security, assuming the pure expectations theory is valid? Disregard cross-product terms, i.e., if averaging is required, use the arithmetic average. a. 5.14% b. 5.42% c. 5.70% d. 5.99%