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(Solved): Suppose the real risk-free rate is 2.3%, the average future inflation rate is 2%, and a maturity pr ...




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Suppose the real risk-free rate is , the average future inflation rate is , and a maturity premium of per year to maturity applies, i.e., MRP , where is the years to maturity. What rate of return would you expect on a 4-year Treasury security, assuming the pure expectations theory is NOT valid?


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