Question: Problem 6-9 Expected Interest Rate The real risk-free rate is 3.15%. Inflation is expected to be 2.6% this year, 4.65% next year, and then 2.15%

Problem 6-9 Expected Interest Rate

The real risk-free rate is 3.15%. Inflation is expected to be 2.6% this year, 4.65% next year, and then 2.15% thereafter. The maturity risk premium is estimated to be 0.05(t - 1)%, where t = number of years to maturity. What is the yield on a 7-year Treasury note? Round your answer to two decimal places.

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