Question
The real risk-free rate is 2.05%. Inflation is expected to be 2.05% this year, 4.75% next year, and 2.3% thereafter. The maturity risk premium is
The real risk-free rate is 2.05%. Inflation is expected to be 2.05% this year, 4.75% next year, and 2.3% thereafter. The maturity risk premium is estimated to be 0.05% (t - 1)%, where t = number of years to maturity. What is the yield on a 7-year Treasury note?
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Financial Management Theory and Practice
Authors: Eugene Brigham, Michael Ehrhardt, Jerome Gessaroli, Richard Nason
2nd Canadian edition
176517308, 978-0176517304
