A ten-year Treasury bond currently yields 7 percent. The real risk-free rate of interest, r*, is 3.1%. The maturity risk premium has been estimated to be 0.1%(t - 1), where t = the maturity of the bond (that is, for a three-year bond the maturity risk premium is 0.2 percent or 0.002.) Inflation is expected to average 2.5 percent a year for each of the next five years. What is the expected average rate of inflation between years five and ten?
Recently Asked Questions
- Write a program that count the frequency of letters in a paragraph in java language. After that replace the most frequent letter with letter “e”. And then
- Question 12 The primary goal of traditional psychoanalysis is to: a.Bring unconscious material to the conscious mind so then a person can exercise choice.
- Question 11 One of the limitations of cognitive behavior therapy is that: a.The empirical quantitative research is inadequate to support its effectiveness.