Determine the years to maturity

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Reference no: EM1351168

My real risk-free rate is 3.50%, average future inflation rate is 2.25%, and a maturity premium of 0.10% per year to maturity applies, i.e., MRP = 0.10%(t), where t is the years to maturity.

What is the rate of return I should expect on a 5-year Treasury security, assuming the pure expectations theory is not valid?

No cross-product terms are to be used.

Reference no: EM1351168

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