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Entus at, plak TREASURY TO Yield durue + + 1 5 10 e 20 Years To intronty 4. (15 points) Suppose the Treasury Yield Curve
Entus at, plak TREASURY TO Yield durue + + 1 5 10 e 20 Years To intronty 4. (15 points) Suppose the Treasury Yield Curve took the shape represented by the chart above. Assume that lenders in this market require a one per cent real rate of return on their funds. What rate of inflation do market participants expect over the next year? Explain. Based upon the Expectations Theory, what interest rate do market participants expect to observe on one-year Treasury instruments one year from today? Explain how you determined this rate
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