Question: pls show work so i can understand answer 6-14 EXPECTATIONS THEORY AND INFLATION Suppose 2-year Treasury bonds yield 4.5%, while 1y evar bonds yield 3%,r

pls show work so i can understand answer

6-14 EXPECTATIONS THEORY AND INFLATION Suppose 2-year Treasury bonds yield 4.5%, while 1y evar bonds yield 3%,r is 1%, and the maturity risk premium is zero. a. Using the expectations theory, what is the yield on a 1-year bond 1 year from now? Calculate the yield using a geometric average. b. What is the expected inflation rate in Year 1 ? Year 2

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