hailey6822
hailey6822
02.03.2020 • 
Business

On Jan 1st, 2000The real risk-free rate is 2% and is expected to be constant for next 20 years. Inflation is expected to be 7% next year, 5% the following year, and 3% thereafter. The maturity risk premium is estimated to be 0.2*(t -1) % and up to 1%. (t = number of years to maturity). Please estimate the term structure of US treasury. Draw the yield curve on Jan 1st, 2000 and what’s the expected yield curve on Corporate bond?

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