You read in The Wall Street Journal that 30-Day T-bills are currently yielding 5.1%. Your brother-in-law, a
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Question:
You read in The Wall Street Journal that 30-Day T-bills are currently yielding 5.1%. Your brother-in-law, a broker at Safe and Sound Securities, has given you the following estimates of current interest rate premiums:
- Inflation premium = 2.50%
- Liquidity premium = 0.9%
- Maturity risk premium = 2.30%
- Default risk premium = 2.60%
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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