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In the foreseeable future, the real risk-free rate of interest, r*, is expected to remain at 3%, inflation is expected to steadily increase, and the

In the foreseeable future, the real risk-free rate of interest, r*, is expected to remain at 3%, inflation is expected to steadily increase, and the maturity risk premium is expected to be 0.10% (t 1), where t is the number of years until the bond matures. Given this information, which of the following statements is correct?

The yield on 2-year Treasury securities must exceed the yield on 5 year Treasury securities.

The yield on 5-year Treasury securities must exceed the yield on 10-year corporate bonds.

The yield on 5-year corporate bonds must exceed the yield on 8-year Treasury bonds.

The yield curve must be humped.

The yield curve must be upward sloping.

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