3 1 6 7 98 99 B C D E True or False: The quoted (or nominal) interest rate on a debt security is composed of: a real risk-free rate, plus several premiums that reflect... inflation, the security's risk, its liquidity, and the years to its maturity. 9a If inflation during the last 12 months was 2% and the interest rate during that period was 5%, what was the real rate of interest? Inflation 2.0% 5.0% Nominal interest rate 9b if inflation is expected to average 4% during the next year and the real rate is 3%, what should the current rate of interest be? Inflation 4.0% Real rate of interest 5:309 3.0% Which of these is NOT part of the Federal Reserve's mandate: 1. Maximum employment 2. Sustaining Bank Profits 3. Moderate long-term interest rate 4. Stable Prices Match the description below with the shape of the Yield Curve A. all maturities have similar yields. Normal B. higher long term interest rates than short term interest rates. C. long-term yields fall below short-term yields Inverted Flat A 8 00 101 102 103 104 105 106 10 11 K Real rate of interest Nominal rate of interest