The real rate of interest is 1.5% and expected to stay constant. The table below shows information for two bonds:

	Years to maturity	/Expected inflation premium/	Risk premium
Bond A	10	3%	2.5%
Bond B	20	4%	1%

1. What is the risk-free rate for an investment over 10 years?

2. What is the risk-free rate for an investment over 20 years?

3. What is the nominal interest rate (or yield to maturity) for bond A?

4. What is the nominal interest rate (or yield to maturity) for bond B?

5. Based only on the information provided, do you expect the yield curve to be

flat,

upward sloping,

downward sloping, or

impossible to tell from the data?