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Suppose the inflation rate is expected to be 6 % next year, 5 % the following year, and 3 % thereafter. Assume that the real
Suppose the inflation rate is expected to be next year, the following year, and thereafter. Assume that the real riskfree rate, will remain at and that maturity risk premiums on Treasury securities rise from zero on very shortterm bonds those that mature in a few days to for year securities Furthermore, maturity risk premiums increase for each year to maturity, up to a limit of on year or longerterm Tbonds.
a Calculate the interest rate on and year Treasury securities Round your answers to two decimal places.
tableTreasury securitiesInterest rateyear,
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