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Business, 19.11.2019 01:31 ellieflores8400

Treasury securities that mature in 6 years currently have an interest rate of 8.5%. inflation is expected to be 5% in each of the next three years and 6% each year after the third year. the maturity risk premium is estimated to be 0.1% × (t – 1), where t is equal to the maturity of the bond (i. e., the maturity risk premium of a one-year bond is zero). the real risk-free rate is assumed to be constant over time. what is the real risk-free rate of interest?

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