An investor in Treasury securities expects inflation to be 2.2% in Year 1, 2.6% in Year...

An investor in Treasury securities expects inflation to be 2.2% in Year 1, 2.6% in Year 2, and 3.45% each year thereafter. Assume that the real risk-free rate is 2.45% and that this rate will remain constant. Three-year Treasury securities yield 5.70%, while 5-year Treasury securities yield 7.00%. What is the difference in the maturity risk premiums (MRPs) on the two securities; that is, what is MRP₅ - MRP₃? Do not round intermediate calculations. Round your answer to two decimal places.

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jeff jeffy answered 2 years ago

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