Question: Intro 1-year T-bills yield 4.5% and 2-year Treasury notes yield 7.5%. The real risk-free rate of interest is 4% and expected to stay constant, while

Intro 1-year T-bills yield 4.5% and 2-year Treasury notes yield 7.5%.

Intro 1-year T-bills yield 4.5% and 2-year Treasury notes yield 7.5%. The real risk-free rate of interest is 4% and expected to stay constant, while the maturity risk premium is zero. Part 1 Attempt 3/18 for 10 pts. Using the expectations theory, what is the yield on a 1-year risk-free bond, one year from now? 3+ decimals Submit Attempt 3/18 for 10 pts. Part 2 What is the expected inflation rate in Year 1? 4+ decimals Submit Part 3 Attempt 1/18 for 10 pts. What is the expected inflation rate in Year 2? 3+ decimals Submit

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