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Assume that: Real rate (R*) = 2.9% Expected inflation rate = inflation premium (IP) = 7.2% Default risk premium (DRP) = 4.3% Liquidity risk premium

Assume that: Real rate (R*) = 2.9% Expected inflation rate = inflation premium (IP) = 7.2% Default risk premium (DRP) = 4.3% Liquidity risk premium (LRP) = 0.2% Maturity risk premium (MRP) for 1 year bonds = 0.9%; for 2 year bonds = 1.4%; for 3 year bonds = 2.2% Given this information, what is the yield to maturity (YTM) for 3 year bonds (i.e., R3)

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