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Suppose the rate of return on a 10-year T-bond is currently 5.90% and that on a 10-year Treasury Inflation Protected Security (TIP) is 2.10%. Suppose

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Suppose the rate of return on a 10-year T-bond is currently 5.90% and that on a 10-year Treasury Inflation Protected Security (TIP) is 2.10%. Suppose further that the maturity risk premium on a 10-year T-bond is 1.9%, that no maturity risk premium is required on TIPs, and that no liquidity premiums are required on any T-bonds. Given this data, what is the expected rate of inflation over the next 10 years? Select one: a. 2.00% b. 1.90% O c.2.10% O d. 1.00% O e 2.20%

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