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5-year Treasury bonds yield 6.3%. The inflation premium (IP) is 2.1%, and the maturity risk premium (MRP) on 5-year T-bonds is 0.4%. There is
5-year Treasury bonds yield 6.3%. The inflation premium (IP) is 2.1%, and the maturity risk premium (MRP) on 5-year T-bonds is 0.4%. There is no liquidity premium on these bonds. What is the real risk-free rate, r*? a. 4.60% O b. 4.20% c. 1.70% O d. 3.80% O e. 5.78%
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Contemporary Financial Management
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow
10th Edition
978-0324289114, 0324289111
