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An investor in Treasury securities expects inflation to be 2.5% in Year 1, 3.45% in Year 2, and 4.45% each year thereaft
Posted: Fri Jul 01, 2022 7:51 am
by answerhappygod
- An Investor In Treasury Securities Expects Inflation To Be 2 5 In Year 1 3 45 In Year 2 And 4 45 Each Year Thereaft 1 (47.98 KiB) Viewed 39 times
An investor in Treasury securities expects inflation to be 2.5% in Year 1, 3.45% in Year 2, and 4.45% each year thereafter. Assume that the real risk-free rate is 2.45%, and that this rate will remain constant. Three-year Treasury securities yield 6.40%, while 5-year Treasury securities yield 7.60%. What is the difference in the maturity risk premiums (MRPs) on the two securities; that is, what is MRP5 - MRP3? Round your answer to two decimal places.