Question 10 Suppose you and other investors expect that inflation will be 4 next year, to rise to 5% during the following year and then to remain at 5.4% thereafter. Further you expect that the real risk rate of interest will remain at 2 and the maturity risk premium on treasury Securities will rise from 2% for one year bonds. Maturity risk premiums are expected to increase 0.2% for each ye to maturity up to a link of 10 percentage point on Syear or longer term T-bondh What is the return on a year bond? Wie your answer as a percentage Les Correct Aronen onnoot Question 7 One year Treasury securities yield 6%. The market anticipates that 1 year from now 1 year Treasury securities will today for 2 year Treasury securities? Write your answer as a percentare le for example write s if the pure expectations theory is correct, what should be the yield Connect Arowen 0 300.0ot