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r* = real risk-free rate 3% Constant inflation premium (IP) 5% Maturity risk premium (MRP) 3% Default risk premium for AAA bonds (DRP) 4% Liquidity

r* = real risk-free rate 3% Constant inflation premium (IP) 5% Maturity risk premium (MRP) 3% Default risk premium for AAA bonds (DRP) 4% Liquidity premium for long-term Treasury bonds (T-bonds) (LP) 3%

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