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A thirty-year U.S. Treasury bond has a 4.0 percent interest rate. In contrast, a ten-year Treasury bond has an interest rate of...Asked by Jon
A thirty-year U.S. Treasury bond has a 4.0 percent interest rate. In contrast, a ten-year treasury bond has an interest rate of 3.7 percent. If inflation is expected to average 1.5 percentage points over both the next ten years and thirty years, determine the maturity risk premium for the thirty-year bond over the ten-year bond.
Compute the MRP for both types of Bonds and subtract the difference.
Compute the MRP for both types of Bonds and subtract the difference.
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Answered by
brayden
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