jenn8055
jenn8055
18.02.2022 • 
SAT

Suppose the yield on a 10-year t-bond is currently 5. 05% and that on a 10-year treasury inflation protected security (tips) is 3. 0%. Suppose further that the mrp on a 10-year t-bond is 0. 90%, that no mrp is required on a tips, and that no liquidity premium is required on any t-bond. Given this information, what is the expected rate of inflation over the next 10 years? disregard cross-product terms, i. E. , if averaging is required, use the arithmetic average.

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