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5-year Treasury bonds yield 4%. 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 4%. 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. 0.82%
b. 1.04%
c. 1.26%
d. 1.70%
e. 1.48%

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