Question: Problem 6-5 : Maturity Risk Premium The real risk-free rate is 3.25%, and inflation is expected to be 2.75% for the next 2 years. A

Problem 6-5: Maturity Risk Premium

The real risk-free rate is 3.25%, and inflation is expected to be 2.75% for the next 2 years. A 2-year Treasury security yields 8.25%. What is the maturity risk premium for the 2-year security?

Calculate with at least 4 decimal places on your calculator and round your final answer to two decimal places. For example, if your answer is $345.6671 enter as 345.67 and if your answer is .05718 or 5.718% enter as 5.72 in the answer box provided.

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