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(5-19) Maturity Risk Premiums Assume that the real risk-free rate, r is 3% and that inflation is expected to be 8% in Year 1,5% in

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(5-19) Maturity Risk Premiums Assume that the real risk-free rate, r" is 3% and that inflation is expected to be 8% in Year 1,5% in Year 2, and 4% thereafter. Assume also that all Treasury securities are highly liquid and flot of default risk. If 2-year and 5-year Treasury notes both yield 10%, what is the difference in the maturity risk premiums (MRP) on the two note that is what is MRP, minus MRP

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