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Assume that a 3-year Treasury security yields 5.10%. 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 yields 5.10%. Also assume that the real risk-free rate (r") is 0.75%, and inflation is expected to be 2.25% annually 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 5 pts A Treasury bond that matures in 10 years has a yield of 4.75%. A 10-year corporate bond has a yield of 6.50%. 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, 5 nte
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