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QUESTION
Suppose the yield on a 2-year Treasury bond is 5%, and the yield on a 1-year Treasury bond is 4%.
Suppose the yield on a 2-year Treasury bond is 5%, and the yield on a 1-year Treasury bond is 4%. If the maturity risk premium (MRP) on these bonds is zero (0), what is the expected 1-year interest rate during the second year (Year 2)?
