Question: Take a minute and read the question below and help solve it. Using these 1 year forward rates, calculate the expected annual inflation rate in

Take a minute and read the question below and help solve it.

Using these 1 year forward rates, calculate the expected annual inflation rate in each of the next 10 years, and use this rate to obtain the average rate of price appreciation over the 1993 to 2002 period. Assume expectations, knominal = kreal + expected inflation premium expected inflation premium = knominal - kreal = 1993-1994 = 5.5-3.8 = 1.7%

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