Question
Suppose the rate of return on a 10-year T-bond is 6.55%, the expected average rate of inflation over the next 10 years is 2.0%, the
Suppose the rate of return on a 10-year T-bond is 6.55%, the expected average rate of inflation over the next 10 years is 2.0%, the MRP on a 10-year T-bond is 0.9%, no MRP is required on TIPS, and no liquidity premium (LP) is required on any Treasury security. Given this data, what should the yield be on a 10-year TIPS?
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Financial Markets And Corporate Strategy
Authors: David Hillier , Mark Grinblatt , Sheridan Titman
2nd Edition
0077129423,0077141350
