3. Chapter MC, Section 36, Problem 035 The real risk-free rate is expected to remain constant at 3% in the future, a 2% rate of inflation is expected for the next 2 years, after which inflation is expected to increase to 4%, and there is a positive maturity risk premium that increases with years to maturity. Given these conditions, which of the following statements is CORRECT? Oa. The Treasury yield curve under the stated conditions would be humped rather than have a consistent positive or negative slope. Ob. The yield on a 5-year Treasury bond must exceed that on a 2-year Treasury bond. Oc. The conditions in the problem cannot all be true--they are internally inconsistent Od. The yield on a 7-year Treasury bond must exceed that of a 5-year corporate bond. Oe. The yield on a 2-year T-bond must exceed that on a 5-year T-bond