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The Wall Street Journal reports that the rate on three-year Treasury securities is 6.50 percent, and the six- year Treasury rate is 6.80 percent. From

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The Wall Street Journal reports that the rate on three-year Treasury securities is 6.50 percent, and the six- year Treasury rate is 6.80 percent. From discussions with your broker, you have determined that expected Inflation premium is 2.25 percent next year, 250 percent in Year 2 and 260 percent in Year 3 and beyond. Further, you expect that real interest rates will be 3.4 percent annually for the foreseeable future. Calculate the maturitytisk premium on the three-year and the six-year Treasury security O 3-year: 0.6 percent; 6-year: 0.80 percent 3.year 05 percent 6-year: 0.90 percent O 3-year: 0.6 percent 6-year: 120 percent O 3-year: 0.5 percent, 6-year: 0.80 percent References Multiple Choice Difficulty: 2 Intermediate

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