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Suppose the real risk-free rate is 3.00%, the average expeeted future inflation rate is 4.00%, and a maturity risk premium of 0.10% per year to

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Suppose the real risk-free rate is 3.00%, the average expeeted future inflation rate is 4.00%, and a maturity risk premium of 0.10% per year to maturity applies, i.e, MRP =0.10%(t), where t is the years to maturity. What rate of retum would you expect on a 1-year Treasury security, assuming the pure expectations theory is NOT valid? Include the cross-product term, i.c., if averaging is required, use the geometric average, (Round your final answer to 2 decimal places.) 8.88% 7.15% 7.22% 7.80% 8.95%

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