Question: Your 2-year Treasury bonds yield is 4.8%, while 1-year bonds yield is 4.6%. r* is 1%, and the maturity risk premium is always zero. Negative

Your 2-year Treasury bonds yield is 4.8%, while 1-year bonds yield is 4.6%. r* is 1%, and the maturity risk premium is always zero. Negative expected inflation rates, if any, should be always be indicated by a negative sign.

A. What is the yield on Year 1 bond, 1 year from now

B. Expected inflation rate for Year One.

C. Expected inflation rate for Year Two.

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