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B eBook Suppose 2-year Treasury bonds yleld 4.4%, while 1-year bonds yield 3.1%. r* is 1%, and the maturity risk premium is zero. a. Using

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B eBook Suppose 2-year Treasury bonds yleld 4.4%, while 1-year bonds yield 3.1%. r* is 1%, and the maturity risk premium is zero. a. Using the expectations theory, what is the yield on a 1-year bond, 1 year from now? Calculate the yield using a geometric average. Do not round Intermediate calculations. Round your answer to two decimal places. % b. What is the expected inflation rate In Year 17 Year 2? Do not round intermediate calculations. Round your answers to two decimal places, Expected Inflation rate in Year 1: Expected Inflation rate in Year 2: % %

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