Question: lestion 1 6 ( 3 5 points ) Assume the following: The real risk - free rate, r * * , is expected to remain

lestion 16(35 points)
Assume the following: The real risk-free rate, r**, is expected to remain constant at 3%. Inflation is expected to be 3% ext year and then to be constant at 2% a year thereafter. The maturity risk premium is zero. Given this information, which of the following statements is CORRECT?
A 5-year corporate bond must have a lower yield than a 7-year Treasury security.
This problem assumed a zero maturity risk premium, but that is probably not valid in the real world
A 5-year corporate bond must have a lower yield than a 5-year Treasury security.
The yield curve for U.S. Treasury securities will be upward sloping
The real risk-free rate cannot be constant if inflation is not expected to remain constant
lestion 1 6 ( 3 5 points ) Assume the following:

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