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Author Question: The real rate of interest over the next two years is expected to remain at 2% per annum. Inflation ... (Read 49 times)

elizabeth18

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Question 1

The real rate of interest is 2% and the expected inflation rate is 2%. What is the nominal rate of interest?
◦ 2.02%
◦ 3.04%
◦ 4.00%
◦ 4.04%
◦ 4.24%

Question 2

The real rate of interest over the next two years is expected to remain at 2% per annum. Inflation is expected to be 1.5% per annum over the next two years. At the last auction, 2-year T-Notes were priced to yield 4%. What is the maturity risk premium for two year maturities? (Assume that the T-Notes have no liquidity risk.)
◦ 0.40%
◦ 0.43%
◦ 0.45%
◦ 0.47%
◦ 0.50%


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Marked as best answer by elizabeth18 on Apr 25, 2021

parker125

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elizabeth18

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Reply 2 on: Apr 25, 2021
Great answer, keep it coming :)


carojassy25

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Reply 3 on: Yesterday
:D TYSM

 

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