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Question 28 1 pts Because of recession, the inflation rate expected for the coming year is only 2%. However, the inflation rate in year 2
Question 28 1 pts Because of recession, the inflation rate expected for the coming year is only 2%. However, the inflation rate in year 2 and thereafter is expected to be constant at some level above 2%. Assume that the real risk-free rate is r*=3% for all maturities and that there are no maturity premiums. If 3-year Treasury Notes yield 2 percentage points more than 1-year notes, what inflation is expected after year 1? 9.5% 8.0% O 11.0% 5.0% 6.5% Question 27 1 pts You must make a payment of $1,000 in 10 years. To get the money for this payment, you will make 5 equal deposits, beginning today and for the following 4 quarters, in a bank that pays a nominal interest rate of 7% with quarterly compounding. How large must each of the 5 payments be? O $103.42 O $137.02 $113.56 $124.72 O $94.20
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