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1. Problem 6.02 Click here to read the eBook: The Determinants of Market Interest Rates REAL RISK-FREE RATE You read in The Wall Street Journal

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1. Problem 6.02 Click here to read the eBook: The Determinants of Market Interest Rates REAL RISK-FREE RATE You read in The Wall Street Journal that 30-day T-bills are currently yielding 5%. Your brother-in-law, a broker at Safe and Sound Securities, has given you the following estimates of current interest rate premiums: Inflation premium = 3% Liquidity premium = 0.4% Maturity risk premium = 2.15% Default risk premium = 2.6% On the basis of these data, what is the real risk-free rate of return? Round your answer to two decimal places. D %

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