question archive With the following data, find the expected rate of inflation during the next year
With the following data, find the expected rate of inflation during the next year
Subject:BusinessPrice: Bought3
With the following data, find the expected rate of inflation during the next year.
- k* = real risk free rate = 3%
- Maturity risk premium on 10-year T-bonds = 2%. It is zero on 1-year bonds, and a linear relationship exists.
-Default risk premium on 10-year, A-rated bonds = 1.5%
-Liquidity premium = 0%
-Going interest rate on 1-year T-bonds = 8.5%
