Question
You read in the Wall Street Journal that 30 day t-bills are currently yielding 5.8%. Your brother-law, a broker at Safe and Sound securities has
You read in the Wall Street Journal that 30 day t-bills are currently yielding 5.8%. Your brother-law, a broker at Safe and Sound securities has given you the following estimates of current interest rate premiums
- Inflation premium 3.25%
- Liquidity premium 0.6%
- Maturity risk premium 1.85%
- Default risk premium 2.15%
On the basis of these data, what is the real risk-free rate of return?
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
Concise 6th Edition
324664559, 978-0324664553
