What rate of return would you expect

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Reference no: EM131532228

Assume the real risk-free rate is 2.50%, the average expected future inflation rate is 3.10%, and a maturity risk premium of 0.15% per year to maturity applies, i.e., MRP = 0.10% times "t", where "t" is the years to maturity. What rate of return would you expect on a 4-year Treasury security, assuming the pure expectations theory is NOT valid?

Reference no: EM131532228

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