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Assume that the real, risk-free rate of interest is expected to be constant over bme at 3.0 percent. and that the annal vield on 4-vear

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Assume that the real, risk-free rate of interest is expected to be constant over bme at 3.0 percent. and that the annal vield on 4-vear Treasury securities is 7.15 percent. while the annual yield on 6-year Treasury securities is 7.75 percenti vou may assume that the default risk and liquidity premium on Treasury securities is zero. Also assume -11. where t is the number of periods until maturity, Given this information, and assuming that the expected rate of inflation for Year 1 is 3.0 percent. for Year 2 is 35K, for Year 3 is 4.0 percent fyou should now be able to determine what the expected rate is for Year 4), and that the expected rate of inflation for Year 6 is 4.50 percent. determine what the market must anticipate the rate of inflation will be in Year 5

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