Foreseeable future-the real risk-free rate of interest

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Reference no: EM131306308

In the foreseeable future, the real risk-free rate of interest, r*, is expected to remain at 3%, inflation is expected to steadily increase, and the maturity risk premium is expected to be 0.1(t 1)%, where t is the number of years until the bond matures. Given this information, which of the following statements is CORRECT? a. The yield curve must be "humped." b. The yield on 2-year Treasury securities must exceed the yield on 5-year Treasury securities. c. The yield on 5-year corporate bonds must exceed the yield on 8-year Treasury bonds. d. The yield curve must be upward sloping. e. The yield on 5-year Treasury securities must exceed the yield on 10-year corporate bonds.

Reference no: EM131306308

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