Estimate the rate of return on a 5 year treasury security
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Risk free interest rate is 2.50% and future rate of inflation is to be a constant 3.5%.
What rate of return would you expect on a 5 year Treasury security assuming the pure expectation theory is valid?
No cross product terms
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This post shows the expectation rate of return on a 5 year Treasury security assuming the pure expectation theory.
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