Question: a) Suppose that the yield (interest) on a three - year Treasury bond is 4 percent and the yield (Interest) on a four year Treasury

a) Suppose that the yield (interest) on a three - year

a) Suppose that the yield (interest) on a three - year Treasury bond is 4 percent and the yield (Interest) on a four year Treasury bond is 4.5 percent. The MRP for these bonds equal zero. Using the rates on these bonds, estimate the one - year interest rate in year 4 . If r*-2% each year, what is the expected inflation rate in year 4

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