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What is the difference in the maturity risk premiums

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An investor in Treasury securities expects inflation to be 1.7% in Year 1, 2.1% in Year 2, and 2.85% each year thereafter. Assume that the real risk-free rate is 2.15% and that this rate will remain constant. Three-year Treasury securities yield 6.40%, 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.

Reference no: EM132494600

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