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Suppose the real risk-free rate is 3.50%, the average future inflation rate is 2.25%, and a maturity risk premium of 0.10% per year to maturity
Suppose the real risk-free rate is 3.50%, the average future inflation rate is 2.25%, 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 return would you expect on a 5-year Treadury security?
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