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Suppose the real risk-free rate of interest is r=4% and it is expected to remain constant over time, Inflation is expected to be 2.00% per

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Suppose the real risk-free rate of interest is r=4% and it is expected to remain constant over time, Inflation is expected to be 2.00% per year for the next two years and 4.50% per year for the next three years. The maturity risk premium is 0.1(t1)%, where t is number of years to maturity, a liquidity premium is 0.25%, and the default risk premium for a corporate bond is 1.70%. The average inflation during the first 3 years is What is the yield on a 3-year Treasury bond? 7.03% 8.98% 4.20% 6.83% What is the yield on a 3-year BBB-rated bond? 8.73% 7.03% 7.28% 8.98% If the yield on a 5-year Treasury bond is 7.90% and the yield on a 6 -year Treasury bond is 8.42%, the expected inflation in 6 years (Hint: Do not round intermediate calculations.)

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