Intro

The real short$-$term risk$-$free rate is $1\%$ and expected to stay constant. The

inflation rate is expected to be $0\mathrm{.}9\%$ this year, $2\%$ for each of the following $5$

years, and $2\mathrm{.}5\%$ thereafter. The maturity risk premium is expected to be $0\mathrm{.}0004*$

$T,$ where $T$ is the number of years to maturity.

Part $1$

What is the expected yield on a $1-$year Treasury bill?