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have an increasing value for longer debt. One-year government debt yields 9%, whereas two-year debt yields 11.6%. Round all answers to one decimal and add
have an increasing value for longer debt. One-year government debt yields 9%, whereas two-year debt yields 11.6%. Round all answers to one decimal and add a \% sign. a. What is the real risk-free rate for two-year debt? Round your answer to one decimal place and add a \% sign. b. What is the maturity risk premium for two-year debt? Round your answer to one decimal place and add a \% sign. c. Forecast the expected interest rate on one-year government debt issued at the beginning of the second year. Round your answer to one decimal place and add a \% sign. Hint: this is a 1 year bond that starts in year 2 , which means the Inflation is a steady 6%. d. Forecast the interest rate on two-year government debt issued at the beginning of the second year. Round your answer to one decimal place and add a \% sign
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