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Posted by: Homeworkhelp
Price Quoted by Student: $2
Posted On: 2011-02-14 12:12:43
 
Question

Maturity Risk Premium Problem. The real risk-free rate is 3%,and inflation is expected to be 3% for the next 2 years. A 2-year Treasury security yields 6.3%. What is the maturity risk premium for the 2-year security?


Solutions
r RF = r* + IP + MRP 6.3% = 3% + 3% + MRP MRP =
Price $2
Attachment 1: The real risk-free rate of interest is 4%. Inflation is expected to be 2% this year (2).doc
Solution Posted By: Homeworkhelp    Posted on: 14-02-2011