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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
2) Given the following data on yields of 10 year Treasury notes and 10 year TIPS,(treasury inflation protection securities) what conclusion do you draw about:
a) Changes in investors` expectation of inflation rates in the US since spring 2012? Give a numerical answer if you can and in any case explain why you think the data indicate a rise or fall in inflation expectations.
b) Changes in the required yields on 10 year Treasuries. Explain your answer.
                          10 Year T-note yield            10 Year TIPS Yield
Spring 2012: Â Â Â Â Â Â 1.967%Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â -0.255%
now                     2.23%                                                 0.46%
C) Other than linking TIPS future cash flows to the CPI, what other differences between 10 year TIPS and 10 year Treasuries could affect the difference in their yields? Explain
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