(Interest rate determination) If the 10-year Treasury bond rate is 4.9%, the inflation premium is 2.1%, and the maturity-risk premium on 10-year Treasury bonds is 0.3%, assuming that there is no liquidity-risk premium on these bonds, what is the real risk-free interest rate? (Interest rate determination) You've just taken a job at a investment-banking firm and been given the job of calculating the appropriate nominal interest rate for a number of different Treasury bonds with different maturity dates. The real risk-free interest rate that you have been told to use is 2.5%, and this rate is expected to continue on into the future without any change. Inflation is expected to be constant over the future at a rate of 2.0%. Since these are bonds that are issued by the U.S. Treasury, they do not have any default risk or any liquidity risk (that is, there is no liquidity-risk premium). The maturity-risk premium is dependent upon how many years the bond has to maturity. The maturity-risk premiums are as follows