Compute the rate of inflation for each year

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Reference no: EM13985044

1. Collect data on CPI-U for the last 25 years (annual data) and compute the rate of inflation for each year. Use MS Excel for computation. (Hint: rate of inflation = (CPI(t) - CPI(t-1))/CPI(t-1)) * 100

2. Collect annual data on 1-year T-security rate (nominal rate of interest). Using the inflation rate data in #1, compute the "real rate of interest" for each year. (Hint: Fisher equation)

3. Collect data on short-term, medium-term and ling-term yield on Treasury securities from the WSJ.

(a) Using the data, draw a yield curve.

(b) What does this curve tell you about inflation in future?

Show interest rates data and the yield curve

Reference no: EM13985044

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