The real risk-free rate, r*, is 4.5%, and it is expected to remain constant over time. Inflation is expected to be 2% per year for the next three years, after which time inflation is expected to...


The real risk-free rate, r*, is 4.5%, and it is expected to remain constant over time.  Inflation is expected to be 2% per year for the next three years, after which time inflation is expected to remain at a constant rate of 3% per year.  The maturity risk premium is equal to 0.1(t - 1)%, where t = the bond’s maturity.  What is the yield on a 10-year Treasury bond?



Jun 06, 2022
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