An investor in treasury securities expects inflation to be, Ask an Expert

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An investor in Treasury securities expects inflation to be 1.9% in Year 1, 2.85% in Year 2, and 3.9% each year thereafter. Assume that the real risk-free rate is 2.3%, and that this rate will remain constant. Three-year Treasury securities yield 6.05%, while 5-year Treasury securities yield 7.10%. 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.

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Financial Management, Finance

Category:- Financial Management
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