Question: Assume that a three - year treasury note ( T - note ) has no maturity premium, and that the real risk - free rate

Assume that a three-year treasury note (T-note) has no maturity premium, and that the real risk-free rate of interest is 5 percent. If the T-note varries a nominal risk rate of return of 13 perent and if the expected average infaltion rate over the next two years is 9 percent, what is the implied expected inflation rate during Year 3?

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