Question: Use the interest rate model to solve the following problem. One-year treasury securities are yielding 12% and two-year treasuries yield 14%. The maturity risk premium

Use the interest rate model to solve the following problem. One-year treasury securities are yielding 12% and two-year treasuries yield 14%. The risk premium is zero for one-year debt and 1% for two-year debt. The real risk-free rate is 3%. What are the expected rates of inflation for the next two years?

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