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You have the following information gathered about a bond: Yield-to-Maturity = 7.4% Real Rate of Interest = 2.2% Default Risk Premium = 2.4% Liquidity Risk

You have the following information gathered about a bond:

  • Yield-to-Maturity = 7.4%
  • Real Rate of Interest = 2.2%
  • Default Risk Premium = 2.4%
  • Liquidity Risk Premium = 0.2%
  • Maturity Risk Premium = 0.5%
  • Special Characteristics Premium = 1.1%

Given this, the average annualized expected rate of inflation over the life of this bond is ___%

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