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EXPECTED INTEREST RATE The real risk-free rate is 2.05%. Inflation is expected to be 2.3% this...

EXPECTED INTEREST RATE The real risk-free rate is 2.05%. Inflation is expected to be 2.3% this year, 4.55% next year, and 2.55% thereafter. The maturity risk premium is estimated to be 0.05 × (t - 1)%, where t = number of years to maturity. What is the yield on a 7-year Treasury note? Do not round your intermediate calculations. Round your answer to two decimal places.

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Answer #1

yield on 7 year Treasury note=real risk free rate+inflation premium+maturity risk premium=2.05%+(2.3%+4.55%+2.55%*5)/7+0.05*(7-1)%=5.150%

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