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  3. an investor in treasury securities expects inflati

An investor in Treasury securities expects inflation to be 2.5% in Year 1, 3.4% in Year...

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Finance

An investor in Treasury securities expects inflation to be 2.5%in Year 1, 3.4% in Year 2, and 4.35% each year thereafter. Assumethat the real risk-free rate is 2.15% and that this rate willremain constant. Three-year Treasury securities yield 6.25%, while5-year Treasury securities yield 8.15%. What is the difference inthe maturity risk premiums (MRPs) on the two securities; that is,what is MRP5 - MRP3? Do not roundintermediate calculations. Round your answer to two decimalplaces.

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