Corporate Finance Assignment/ Professional Essay Writers
May 7th, 2020
An investor in Treasury securities expects inflation to be 2.5% in Year 1, 3.1% in Year 2, and 3.95% each year thereafter. Assume that the real risk-free rate is 1.75% and that this rate will remain constant. Three-year Treasury securities yield 6.30%, while 5-year Treasury securities yield 7.00%.
What is the difference in the maturity risk premiums (MRP) on the two securities; that is, what is MRP5 – MRP3? Do not round intermediate calculations. Round your answer to two decimal places. Get Finance Help Today