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Suppose the real risk-free rate is 3.2%, the average future inflation rate is 1.9%, and a maturity premium of 0.05% per year to maturity applies,
Suppose the real risk-free rate is 3.2%, the average future inflation rate is 1.9%, and a maturity premium of 0.05% per year to maturity applies, ie., MRP = 0.05%[t), where t is the years to maturity. What rate of return would you expect on a 5-year Treasury security, assuming the pure expectations theory is NOT valid? 6.25% 5.65% 6.559 0 5.95% 5.35%
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