Question: Suppose the Treasury issues an inflation protected $1000 par value TIPS bond with a maturity of 5 years and an annual yield of 2 percent.

Suppose the Treasury issues an inflation protected $1000 par value TIPS bond with a maturity of 5 years and an annual yield of 2 percent. If the 5-year regular Treasury note has an annual yield of 4 percent, what the markets expected inflation rate over the next 5 years?

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