Question: Suppose that a 5-year Treasury note currently offers a 3% annual return. Investors believe that interest rates are going to decline, and 5 years

Suppose that a 5-year Treasury note currently offers a 3% annual return. Investors believe that interest rates are going to decline, and 5 years from now, they expect the rate on a 5-year Treasury note to be 2.5%. According to the expectations theory, what is the return that a 10-year Treasury note has to offer today? What does this imply about the slope of the yield curve?

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