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Graduate2009
Dec 3, 2008, 03:45 PM
The risk free rate of interest is 3%. Inflation is expected to be 3% this year, 2% next year and 5%the following years. Assume the maturity risk premium is calculated to be .10x(t-1)%.

What is the yield on a 2 yr security?

A 4 year treasury?

10 year?

Hellen Edward
Dec 3, 2008, 03:58 PM
4 years