Question: The real risk - free rate is 2 % . Inflation is expected to be 4 % this year, 5 % next year, and then

The real risk-free rate is 2%. Inflation is expected to be 4% this year, 5% next year, and then 3% thereafter. The maturity risk premium is estimated to be 0.0004 x (t -1), where t = number of years to maturity. What is the nominal interest rate on a 7-year Treasury security? Do not round intermediate calculations. Round your answer to two decimal places.

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