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Real Risk-Free Rate (k*): Expected Inflation Rates for each year: After Maturity Risk Premiums: For one-year bond: For two-year bond: For three-year bond: For four-year
Real Risk-Free Rate (k*): Expected Inflation Rates for each year: After Maturity Risk Premiums: For one-year bond: For two-year bond: For three-year bond: For four-year bond: For five-year bond: Explanation: Now, let's calculate the interest rates for each bond: One-year bond: k1=k Inflation+Maturity Risk Premium k1=2.7 Two-year bond: k2=k Inflation+Maturity Risk Premium k2=2.7 Three-year bond: k3=k Inflation+Maturity Risk Premium k3=2.7 Four-year bond: k4=k Inflation+Maturity Risk Premium k4=2.7 Five-year bond: k5=k Inflation+Maturity Risk Premium k5=2.7
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