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The real risk-free rate is 2.65%. Inflation is expected to be 1.60% in the coming year (Year 1), 0.50% in the following year (Year 2),
The real risk-free rate is 2.65%. Inflation is expected to be 1.60% in the coming year (Year 1), 0.50% in the following year (Year 2), and 0.44% in the year after that (Year 3). The maturity risk premium for 2-year bonds is 2.20% and the maturity risk premium for 3-year bonds is 2.32%. What is the yield on a 3-year Treasury security?
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