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Problem 5-18 The real risk-free rate is 2.1%. The maturity risk premium is 0.1% for 1-year maturities, growing by 0.2% per year up to a

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Problem 5-18 The real risk-free rate is 2.1%. The maturity risk premium is 0.1% for 1-year maturities, growing by 0.2% per year up to a maximum of 1.0%. The Interest rate on 4-year treasures (federal government bonds) is 6.2%, 7.3% on 8-year treasures, and 7.8% on 10-year treasuries. What conclusions can be drawn about expected inflation rates over the 10-year period? Round your answers to one decimal place. a. The average inflation rate over the first 4 years: % b. The average inflation rate for years 5-8: % C. The average Inflation rate in years 9 and 10: % 2

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