The real risk-free rate is 3%, and inflation is expected to be 2% for the next...

The real risk-free rate is 3%, and inflation is expected to be 2% for the next 2 years. A 2-year Treasury security yields 6.1%. What is the maturity risk premium for the 2-year security? Round your answer to one decimal place.

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Expert Solution

6.1% = 3% + 2% + Maturity risk premium

Maturity risk premium = 6.1% - 5% = 1.1%

jeff jeffy answered 2 years ago

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