# Question: 1 what is the 3year inflation premium if expected inflation...

###### Question details

**1. What is the 3-year inflation premium if expected
inflation in year 1 is 6%, expected inflation in year 2 is 7% and
expected inflation in year 3 is 8%? (express your answer as a
percentage).**

**__________**

**2. The real risk-free rate of interest is 3%. Inflation
is expected to be 2% this year and 4% next year. Assume that the
maturity risk premium is zero. What is the yield on a 2-year
Treasury security? (express your answer as a
percentage).**

**__________**

**Thank you in advance!!**