What is nominal interest rate on a 7-year treasury security

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The real risk-free rate is 4%. Inflation is expected to be 2% this year, 4% next year, and then 3% thereafter. The maturity risk premium is estimated to be 0.0004 x (t - 1), where t = number of years to maturity. What is the nominal interest rate on a 7-year Treasury security? Round your answer to two decimal places.

Reference no: EM13281583

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