A thirty year U.S. Treasury bond has a 4.0 percent interest rate. In contrast, a ten year Treasury bond has an interest rate of 3.7 percent.

A thirty year U.S. Treasury bond has a 4.0 percent interest rate. In contrast, a ten year Treasury bond has an interest rate of 3.7 percent. If inflation is expected to average 1.5 percentage points over both the next ten years and thirty years, determine the maturity risk premium for the thirty year bond over the ten year bond.

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