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Problem 5-6 Maturity Risk Premium The real risk-free rate is 3%, and inflation is expected to be 4% for the next 2 years. A 2-year

Problem 5-6 Maturity Risk Premium

The real risk-free rate is 3%, and inflation is expected to be 4% for the next 2 years. A 2-year Treasury security yields 8.4%. What is the maturity risk premium for the 2-year security?

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