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MATURITY RISK PREMIUM An investor in Treasury securities expects inflation to be 2.15% in Year 1, 2.95% in Year 2, and 3.75% each year thereafter.

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MATURITY RISK PREMIUM An investor in Treasury securities expects inflation to be 2.15% in Year 1, 2.95% in Year 2, and 3.75% each year thereafter. Assume that the real risk-free rate is 2.15% and that this rate will remain constant. Three-year Treasury securities yield 6.35% while 5-year Treasury securities yield 7.60%, what is the difference in the maturity risk premiums MRPs on the two securities; that is what is MRPs MRP3? Do not round intermediate calculations. Round your answer to two decimal places 3. 1.25

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