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
- the banking system has a desired reserve ratio of 3.0% and there is a currency drain of 15 %. a. what is the money multiplier for the banking system ? the
- On January 1 , 2012 , Hottman Enterprises borrows $ 30,000 to purchase a new Toyota Highlander by agreeing to a 6 % , 4-year note with the bank . Payments of $
- Adquan quiz can you please explain your answers and show the proper steps taken