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Assume that a 3-year Treasury security vields 3.90%. Also assume that the real risk-free rate (r) is 0.75%, and inflation is expected to be 2.25%
Assume that a 3-year Treasury security vields 3.90\%. Also assume that the real risk-free rate (r) is 0.75%, and inflation is expected to be 2.25% annwally for the next 3 years. In addition to inflation, the nominal interest rate also includes a maturity risk premium (MRP) that reflects interest rate risk. What is the maturity risk premium for the 3-year security? Round your answer to two decimal places. Your answer should be between 0.00 and 2.92, rounded to 2 decimal places, with no special characters. Question 2 5pts A Treasury bond that matures in 10 years has a yield of 4.75%. A 10 -year corporate bond has a yield of 7.40%. Assume that the liquidity premium on the corporate bond is 0.6%. What is the default risk premium on the corporate bond? Round your answer to two decimal places. Your answer should be between 0.74 and 2.52 , rounded to 2 decimal places, with no special characters
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