The real risk-free rate is 2%. The inflation rate is expected to be 3.5% for the next 3 years, and 4% thereafter. Assume that LP
The real risk-free rate is 2%. The inflation rate is expected to be 3.5% for the next 3 years, and 4% thereafter. Assume that LP and DRP on all T-securities equal zero. The 10-year T-Bonds yield 1% more than the 5-year T-Bonds. What is the difference in MRP between these 2 bonds?
THE ANSWER IS .85% I am just unsure what the steps are to get that answer.
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Authors: Dr. S. Kr. Paul, Prof. Chandrani Paul
1st Edition
1647251664, 9781647251666
