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5-year Treasury bonds yield 3.5%. The inflation premium (IP) is 1.9%, and the maturity risk premium (MRP) on 5-year bonds is 0.4%. What is the

5-year Treasury bonds yield 3.5%. The inflation premium (IP) is 1.9%, and the maturity risk premium (MRP) on 5-year bonds is 0.4%. What is the real risk-free rate, r*?

Select the correct answer.

a. 1.54%

b. 1.37%

c. 1.71%

d. 1.03%

e. 1.20%

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