Question
A 2-year Treasury security currently earns 1.71 percent. Over the next two years, the real risk-free rate is expected to be 1.00 percent per year
A 2-year Treasury security currently earns 1.71 percent. Over the next two years, the real risk-free rate is expected to be 1.00 percent per year and the inflation premium is expected to be 0.45 percent per year. Calculate the maturity risk premium on the 2-year Treasury security. (Round your answer to 2 decimal places.)
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Compute the price of a 5.0 percent coupon bond with 10 years left to maturity and a market interest rate of 7.8 percent. (Assume interest payments are semiannual.) (Do not round intermediate calculations. Round your final answer to 2 decimal places.) what is the value of the bond?
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