Suppose the real risk-free rate is 3.50%, the average future inflation rate is 2.25%, and a maturity premium of 0.10% per year to maturity applies, ie., MRP=0.10%(t), where t is the years to maturity. What rte of return would you expect on a 5-year Treasury security, assuming the pure expectations theory is NOT valid. Disregard cross-product terms, i.e., if averaging is required, use the arithmetic average.
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