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Business, 26.10.2019 03:43 teacherpreacher

Suppose the real risk-free rate is 4.20%, the average expected future inflation rate is 2.50%, and a maturity risk premium of 0.10% per year to maturity applies, i. e., mrp = 0.10%(t), where t is the number of years to maturity, hence the pure expectations theory is not valid. what rate of return would you expect on a 4-year treasury security? disregard cross-product terms, i. e., if averaging is required, use the arithmetic average. a. 7.67% b. 7.10% c. 7.53% d. 6.96% e. 5.40%

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