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Click here to read the eBook: The Determinants of Market Interest Rates Yield Curves Suppose the inflation rate is expected to be 6% next year,
Click here to read the eBook: The Determinants of Market Interest Rates Yield Curves Suppose the inflation rate is expected to be 6% next year, 496 the following year, and 2.15% thereafter. Assume that the real risk-free rate, r*, will remain at 2.45% and that maturity risk premiums on Treasury securities rise rom zero on very short-term bonds those that mature in a few days to %, for 1 year secu ties. Furthermore maturi . risk premiums increase 0.2% for each year to maturity, up to a limit of 1.0% on 5-year or longer-term T-bonds. a. Calculate the interest rate on 1-year Treasury securities. Round your answer to two decimal places. 8.55 Calculate the interest rate on 2-year Treasury securities. Round your answer to two decimal places. 7.75 *% Calculate the interest rate on 3-year Treasury securities. Round your answer to two decimal places 63,096 6.99 % Calculate the interest rate on 4-year Treasury securities. Round your answer to two decimal places. 3. 6.71 Calculate the interest rate on 5-year Treasury securities. Round your answer to two decimal places. 6.73 % Calculate the interest rate on 10-year Treasury securities. Round your answer to two decimal places Calculate the interest rate on 20-year Treasury securities. Round your answer to two decimal places
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