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Given the indicated maturities listed in the following table, assume the following yields for U.S. Treasury securities: On the following graph, use the blue points
Given the indicated maturities listed in the following table, assume the following yields for U.S. Treasury securities: On the following graph, use the blue points (circle symbol) to plot the yield curve implied by these interest rates. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. The graph's yield curve represents yield curve. Based on the yield curve shown, which of the following statements is true? Interest rates on short-term maturities are higher than rates on medium- and long-term maturities. If inflation in the future is expected to increase, the yield curve on U.S. Treasuries is likely to be downward sloping. Assume a scenario in which there is no maturity risk premium (MRP =0 ), the real risk-free rate is expected to remain constant, and the yield curve for U.S. Treasury securities is likely to be upward sloping for the next 10 years. Is inflation expected to increase, decrease, or stay the same over the next 10 years? Increase Stay the same Decrease
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