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Suppose the inflation rate is expected to be 5% next year, 4% the following year, and 2% thereafter. Assume that the real risk-free rate, r,

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Suppose the inflation rate is expected to be 5% next year, 4% the following year, and 2% thereafter. Assume that the real risk-free rate, r, will remain at. 1% and that maturity risk premlums on Treasury securities rise from zero on very short-term bonds (those that mature in a few days) to 0.2% for 1 -year securities. Furthermore, maturity risk premiums increase 0.2% for each year to maturity, up to a limit of 1.0% on 5 -year or longer-term T-bonds. a. Calculate the interest rate on 1,2+3,4+510 and 20 -year Treasury securities. Round your answers to two decimal places. Seiect the correct yield curve bssed on these data. Ch 06: Assignment - Interest Rates Select the correct yield curve based on these data. The correc thetcon is

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