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The risk free-rate is 3% and inflation is expected to be 3% for the next 2 years. A 2-year...

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The risk free-rate is 3% and inflation is expected to be 3% for the next 2 years. A 2-year treasury security yields 63%. What is the maturity risk premium for the 2-year security?

Treasury security:

A Treasury security is a debt instrument issued by the United States government to finances its operations. Treasuries come in the form of bills, notes, and bonds.

Answer and Explanation:

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A Treasury security is believed to be free of credit risk. As a result, they yield on a Treasury is only reflective of the rate of inflation and a...

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Government Securities: Definition, Types & Examples

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Chapter 24 / Lesson 12
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Find out exactly what are government securities and learn about the government securities definition. Discover the purpose of government-backed securities and see how they are utilized in the financial world through their different types and examples.


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