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please help An investor in Treasury securities expects inflation to be 2.4% in Year 1, 3.0% in Year 2, and 3.75% each year thereafter. Assume
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An investor in Treasury securities expects inflation to be 2.4% in Year 1, 3.0% in Year 2, and 3.75% each year thereafter. Assume that the real risk-free rate is 1.85% and that this rate will remain constant. Three-year Treasury securities yield 6.70%, while S-year Treasury securities yield 8.00%. 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. % A 5-year Treasury bond has a 5.1% yield. A 10-year Treasury bond yields 6.5%, and a 10-year corporate bond yields 10.0%. The market expects that inflation will average 2.6% over the next 10 years (IP10- 2.6 %). Assume that there is no maturity risk premium (MRP = 0) and that the annual real risk-free rate, r", will remain constant over the next 10 years. (Hint: Remember that the default risk premium and the liquidity premium are zero for Treasury securities: DRP LP0.) A 5-year corporate bond has the same default risk premium and liquidity premium as the 10-year corporate bond described. What is the yield on this 5-year corporate bond? Round your answer to one decimal place. % Step by Step Solution
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