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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 11 4% on 4

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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 11 4% on 4 N 3 3 4 4. 5 5 The real risk-free rate for a five-year debt security is 3%. The current yield for a five-year Treasury note is 12%. Assume that the liquidity premium for the security is 0%, what is the maturity risk premium of the security? Select one a. 8% b. 7% C 6% d 5%

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