Assume that the real risk-free rate is 2% and that the maturity risk premium is zero. If a 1-year Treasury bond yield is 5% and a 2-year Treasury bond yields 7%, what is the 1-year interest rate that is expected for Year 2? Calculate this yield using a geometric average. What inflation rate is expected during Year 2? Comment on why the average interest rate during the 2-year period differs from the 1-year interest rate expected for Year 2.

Explanation:

1-year Treasury bond yield is 5% and a 2-year Treasury bond yields 7%

One year interest rate expected for year 2 = [(1+r2)^2 / (1+r1) ]-1 =[ (1+0.07)^2 / (1+0.05) ]-1   = 1.0904 -1  = 9.04%

Inflation rate during year 2 = One year interest rate expected for year 2 – inflation rate  = 9.04%-2%  =7.04%

i think the answer to your question is b. directive

according to the song of roland, the characteristics of an ideal knight are: loyalty to the king, skilled warriors and horseman, valiant, bold, courageous, strong and proud in battle. they should be determined to fulfil their duties and willing to die to make their people safe.