Question: The one-year yield on a Treasury Note is currently .25%. To control for inflation, the Federal Reserve Bank expects to increase the yield (nominal interest

  1. The one-year yield on a Treasury Note is currently .25%. To control for inflation, the Federal Reserve Bank expects to increase the yield (nominal interest rate) on the one-year note by .25% each year, for the next nine years (.5% next year, .75% the following year, etc.). If rational investors take this information into consideration, what is the expected yield on a 6-year Treasury Bond?

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