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Please submit solutions to the following answer 16. The real riskfree rate is 2 percent. The ination rate is expected to be 3 percent a

Please submit solutions to the following answer

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16. The real riskfree rate is 2 percent. The ination rate is expected to be 3 percent a year for the next three years and then 4 percent a year thereafter. ssume that the default risk and liquidity premiums on all Treasury securities equal zero. You observe that 10year Treasury bonds yield 1 percent more than the yield on 5year Treasury bonds. What is the difference in the maturity risk premium on the two bonds? 0.?% 17. The real riskfree rate is 3 percent. The ination rate is expected to be 4 percent for the next two years, 4.5 percent for Years 3 and 4, and 5 percent for each year thereafter. The liquidity and default risk premiums are equal to zero for Treasury securities. The 6year Treasury bonds yield 0.6 percent more than 4year Treasury bonds, and the maturity risk premium on the 6year Treasury bonds {MRP5) is 0.9 percent. What is the maturity risk premium on the 4year Treasury bonds {MRP4)? ITI [1.55%

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