Presume that the real rate of interest

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Presume the inflation rate is expected to be 2% this coming year, 1% the next year, 4% the year after that and 5% thereafter. Presume that the real rate of interest will remain at 25. The maturity risk premium on Treasury securities will be resolute from the formula: 0.01(t-1)% where t is the security's maturity. What is the rate on a 1 -year Treasury security?

Reference no: EM13109510

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