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I 1. Suppose yesterday's Daily Treasury Yield Curve Rates report showed the yield on one-year treasury instruments to be 1.5 % and the yield on
I 1. Suppose yesterday's Daily Treasury Yield Curve Rates report showed the yield on one-year treasury instruments to be 1.5 % and the yield on treasury instruments with two years to maturity to be 3.0%. Suppose the assumptions of the Expectations Theory accurately describe this market. What does the market expect the yield on 1-year Treasury instruments to be one year from today? Explain and show your work. Based upon this information and the expectations theory and assuming no change in the real interest rate, do market participants expect inflation to be higher over the next twelve months (April 2021- March 2022) or the following twelve month period (April 2022- March 2023)? Explain
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