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View Full Version : Topic: maturity risk premium


kat80
Sep 10, 2007, 03:38 AM
Assume that the real risk free rate, r*, is 3 percent an that inflation is expected to be 8 percent in year 1,5 percent in year 2, and 4 percent thereafter. Assume also that all treasury securities are highly liquid and free of default risk. If a 2 year and 5 year treasury notes both yield 10 percent, what is the difference in the maturity risk premium on the two notes: that is what is MRP1 minus MRP2?

Clough
Sep 10, 2007, 04:40 AM
You might want to check out the announcement on the following link.

https://www.askmehelpdesk.com/math-sciences/announcement-u-b-read-first-expectations-homework-help-board-b-u.html