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The real risk-free rate is 2%, and inflation is expected to be 3% this year, 4% in year 2, 5% in year 3 and then
The real risk-free rate is 2%, and inflation is expected to be 3% this year, 4% in year 2, 5% in year 3 and then 3.5% thereafter. The maturity risk premium is estimated to be 0.50x(t-1), where t=number of years to maturity. What is the nominal interest rate on a 15-year Treasury security?
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