What is the maturity risk premium for two year security

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Reference no: EM131868226

1. A 10 year loan is being repaid with level monthly payments at the end of each month. The nominal interest rate is 6% compounded monthly. When will the outstanding balance be less than one half of the original loan amount?

2. Maturity Risk Premium

The real risk-free rate is 3.5%, and inflation is expected to be 4% for the next 2 years. A 2-year Treasury security yields 9.5%. What is the maturity risk premium for the 2-year security? Round your answer to two decimal places. _________ %

Reference no: EM131868226

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