What is the maturity risk premium for the security

Reference no: EM131935758

Question: Assume that a 3-year Treasury security yields 3.70%. Also assume that the real risk-free rate (r*) is 0.75%, and Inflation is expected to be 2.25% annually for the next 3 years. In addition to inflation, the nominal interest rate also includes a maturity risk premium (MRP) that reflects interest rate risk. What is the maturity risk premium for the 3-year security? Your answer should be between 0.00 and 2.92, rounded to 2 decimal places, with no special characters.

Reference no: EM131935758

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