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If investors expect inflation to increase over the next 20 years and the maturity risk premium is expected to increase over the next 5 years.
If investors expect inflation to increase over the next 20 years and the maturity risk premium is expected to increase over the next 5 years. What would the general yield curve look like? Assume all other factors that impact interest are expected to be determinate (i.e. not change).
a. inverted/downward sloping
b. normal /upward sloping
c. indeterminate need more information
d. backward curve
e. flat
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