Question
REAL RISK-FREE RATE You read in The Wall Street Journal that 30-day T-bills are currently yielding 4.3%. Your brother-in-law, a broker at Safe and Sound
REAL RISK-FREE RATE
You read in The Wall Street Journal that 30-day T-bills are currently yielding 4.3%. Your brother-in-law, a broker at Safe and Sound Securities, has given you the following estimates of current interest rate premiums:
- Inflation premium = 3.5%
- Liquidity premium = 0.4%
- Maturity risk premium = 1.4%
- Default risk premium = 2.15%
On the basis of these data, what is the real risk-free rate of return? Round your answer to two decimal places.
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Financial Markets And Institutions
Authors: Frederic S. Mishkin, Stanley Eakins
6th International Edition
0321552113, 9780321552112
