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Assume that today is January 1, 2006. A 5-year corporate bond maturing on January 1, 2011, has a yield to maturity o Corporate bond maturing

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Assume that today is January 1, 2006. A 5-year corporate bond maturing on January 1, 2011, has a yield to maturity o Corporate bond maturing on January 1, 2016 with the same 5% A 10-year liquidity and default risk. premiums as the 5-year corporate bond has a yield to maturity of 8.2%. The annual real risk-free rate, r is expected to remain constant at 2%. The maturity risk premium equals 0.1% (t 1), where t- the bond's maturity in years. Inflation is expected to average 2% per year for the next five years. What is the average annual expected inflation between January 2008 and January 2013

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