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The return rate on TIP = 3%. Inflation is expected to be 5% next year, 6% the following year, and 8% thereafter. Maturity risk premium
The return rate on TIP = 3%. Inflation is expected to be 5% next year, 6% the following year, and 8% thereafter. Maturity risk premium will be estimated as: MRPT=0.1%*(T-1). Find the Term Structure for 1-year, 10-year, and 20-year T-Bond. In other words, find the yield on the 1-year, 10-year, and 20-year T-Bond.
I already figured out the 1-year and 10-year yield but having problems with the 20-year one.
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