The real risk-free rate is 3 percent. Inflation is expected to be 3 percent this year, 4

Question:

The real risk-free rate is 3 percent. Inflation is expected to be 3 percent this year, 4 percent next year, and then 3.5 percent thereafter. The maturity risk premium is estimated to be 0.0005 = (t = 1), where t = number of years to maturity. What is the nominal interest rate on a 7-year Treasury security?

Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...