What is the expected yield on five-year treasury bond

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Reference no: EM131870356

The one-year yield on a treasury note is currently 2%. To control for inflation, the Federal Reserve Bank expects to increase the yield (nominal interest rate) on the one-year note by 1% each year, for the next four years (3% next year, 4% the following year, etc.). If rational investors take this information into consideration, what is the expected yield on a 5-year Treasury Bond?

Reference no: EM131870356

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