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(Interest rate determination) You've just taken a job at an investment banking firm and been given the job of calculating the appropriate nominal interest rate for a number of different Treasury bonds with different maturity dates. The realrisk-free interest rate that you have been told to use is 2.5 %, and this rate is expected to continue on into the future without any change. Inflation is expected to be constant over the future at a rate of 2.0 %. Since these are bonds that are issued by the U.S.Treasury, they do not have any default risk or any liquidity risk(that is, there is noliquidity-risk premium). Thematurity-risk premium is dependent upon how many years the bond has to maturity. Thematurity-risk premiums are asfollows:

BOND MATURESIN:	MATURITY-RISK PREMIUM:
0-1 year	0.05%
1-2 years	0.30%
2-3 years	0.60%
3-4 years	0.90%

The nominal rate of interest on Treasury bonds maturing in0-1 year should be ________%. (Round to two decimalplaces.)