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Ch6ClassProblems - year bond Three year bond Ten year bond...

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Chapter 6 Problems worked in class Suppose you expect inflation to be 3% next year, 4% the year after that and 5% for all the years following. What is the inflation premium on a two
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Unformatted text preview: year bond? Three year bond? Ten year bond? IP(2) : (3+4)/2 = 3.5% IP(3): (3+4+5)/3 = 4% IP(10): (3+4 + 8*5)/10 = 4.7%...
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