) A thirty-year U.S Treasury bond has a 4.0 percent interest rate. In

Question

Contrast, a ten-year Treasury bond has an interest rate of 2.5 percent.
A maturity risk premium is estimated to be 0.2 percentage points for the
Longer maturity bond. Investors expect inflation to average 1.5 percentage
Points over the next ten years.
A) Estimate the expect real rate of return on the ten-year U.S treasury bond.
B) If the real rate of return is expected to be the same for the thirty-year bond
Estimate the average annual inflation rate expected by investors over the life
Of the thirty-year bond.