1. The real risk-free rate of interest is 3%. Inflation is expected to be 2% this year and 4% during the next 2 years. Assume that the maturity risk premium is zero.
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3. a. What is the nominal interest rate on 2-year treasury securities?
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5. b. What is the nominal interest rate on 3-year treasury securities?
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To calculate the nominal interest rates we need to add the expected inflation rates to the ... View the full answer