Bond market indicating about future expected interest rates

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Part B

If the yield curve were flat what would you expect to happen to the expected short term interest rate in the future?

Suppose that the yield curve rises over the next few years and then falls so that it looks like a dome. What is the bond market indicating about the future expected interest rates? What does the curve indicate about the future expected inflation rate?

Predict what would happen to the yield on corporate bonds if the federal government decides to guarantee that it will pay the creditors if any corporation goes bankrupt in the future? What would happen to the yield on the federal government bonds?

Reference no: EM131346258

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