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Given the following data, find the expected rate of inflation during the next year. r = real risk-free rate = 2.80%. Maturity risk premium on
Given the following data, find the expected rate of inflation during the next year. r = real risk-free rate = 2.80%. Maturity risk premium on 10-year T-bonds = 2%. It is zero on 1- year bonds, and a linear relationship exists. Default risk premium on 10-year, A-rated bonds = 1.5%. Liquidity premium = 0%. Going interest rate on 1-year T-bonds = 5.80%. . O 2.7% 3.0% 1.8% O 2.4% O 2.1%
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