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The expected annual inflation rates for the coming 5 years are listed in the following table: Year Expected annual inflation rate 1 4% 2 4
The expected annual inflation rates for the coming 5 years are listed in the following table:
Year Expected annual inflation rate
1 4%
2 4
3 3
4 4
5 5
The real risk-free rate for a five-year debt security is 2%.
The current yield for a five-year Treasury note is 9%. Assume that the liquidity premium for the security is 0%, what is the maturity risk premium of the security?
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