The re… Show more I have two questions. I have tried to wo

Assignment Help Finance The re… Show more I have two questions. I have tried to wo

Finance

The re… Show more I have two questions. I have tried to wo

The re… Show more I have two questions. I have tried to work them out but can not come to the right answer. 1.)The real risk-free rate is 2%, and inflation is expected to be 3% for the next 2 years. A 2-year Treasury security yields 8%. What is the maturity risk premium for the 2-year security? *I keep getting 2.94% this is incorect. But I have no idea why. 2.) Assume that the real risk-free rate, r*, is 4% and that inflation is expected to be 7% in Year 1, 5% in Year 2, and 3% thereafter. Assume also that all Treasury securities are highly liquid and free of default risk. If 2-year and 5-year Treasury notes both yield 10%, what is the difference in the maturity risk premiums (MRPs) on the two notes; that is, what is MRP5 minus MRP2? Round your answer to two decimal places. *I keep getting -1.88 % I have also tried 1.88. Neitheris right. • Show less

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