Assume the following: The real risk-free rate, r*, is expected to remain constant at 3%. Inflation is

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Assume the following: The real risk-free rate, r*, is expected to remain constant at 3%. Inflation is expected to be 9% next year and then to be constant at 1% a year thereafter. The maturity risk premium is zero. Given this information, what is the interest rate in % on a two-year T-bond? Present your answer with 3 digits to the right of the decimal.

Posted Date: Jun 06, 2024 04:05 AM

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Assume the following: The real risk-free rate, r*, is expected to remain constant at 3%. Inflation is

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