If the Yield to Maturity for a Par Value TIPS

Multiple Choice

If the yield to maturity for a par value TIPS bond with 8 years to maturity is 3%,and the yield to maturity of a U.S Treasury note with 8 years is 4.25%,this implies that

A) The expected annual rate of inflation over the next 8 years is -1.25%.
B) The expected annual rate of inflation over the next 8 years is 1.25%.
C) The expected annual rate of inflation over the next 8 years is -2.25%
D) The expected annual rate of inflation over the next 8 years is 2.25%
E) None of the above.