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Assume that the real risk-free rate, r*, is 2 percent and that inflation is expected to be 7 percent in Year 1, 6 percent in

Assume that the real risk-free rate, r*, is 2 percent and that inflation is expected to be 7 percent in Year 1, 6 percent in Year 2, and 3 percent thereafter. Assume also that all Treasury securities are highly liquid and free of default risk. If 2-year and 5-year Treasury notes both yield 10 percent, what is the difference in the maturity risk premiums (MRPs) on the two notes; that is, what is MRP?5 minus MRP?2? ? Round your answer to two decimal places

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