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OU An investor in Treasury securities expects inflation to be 2.0%


OU An investor in Treasury securities expects inflation to be 2.0% In Year 1, 2.5% in Year 2, and 3.65% each year thereafter.

Show transcribed image textOU An investor in Treasury securities expects inflation to be 2.0% In Year 1, 2.5% in Year 2, and 3.65% each year thereafter. Assume that the real risk-free rate is 2.15% and that this rate will remain constant. Three-year Treasury securities yield 6.30%, while 5-year Treasury securities yield 8.00%. What is the difference in the maturity risk premiums (MRP) on the two securities; that is, what is MRPS - MRP,? Do not round intermediate calculations. Round your answer to two decimal places.

Aug 14 2020 View more View Less

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