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Assume that the interest rate on a one-year Treasury bill is 5.4 percent and the rate on a two-year Treasury note is 7.8 percent. (a)
Assume that the interest rate on a one-year Treasury bill is 5.4 percent and the rate on a two-year Treasury note is 7.8 percent. (a) If the expected real rate of interest is 2.4 percent, determine the inflation premium on the Treasury bill. (Round answer to 1 decimal place, e.g. 527.5.) Inflation premium % eTextbook and Media Attempts: 0 of 2 used (b) Using the expected real rate of interest from Part A, if the maturity risk premium is expected to be zero, determine the inflation premium on the Treasury note. (Round answer to 1 decimal place, e.g. 527.5.) Inflation premium %
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