Current yield curve for brazilian government issued bonds

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Reference no: EM131560981

1. You are looking at the current yield curve for Brazilian government issued bonds. Two year bonds have a current interest rate of 5.65%, three year bonds have an interest rate of 6.75%. You know investors demand a one year real return of 2%. Given this information what is the expected rate of inflation in year three?

a) 7.10%; b) 6.85%; c) 6.75%; d) 6.15%

2. The bond prices as a function of interest rates are which of the following?

a) a linear relationship; b) a convex relationship; c) An exponential relationship; d) A concave relationship

Reference no: EM131560981

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