Question
You read in The Wall Street Journal that 30-day T-bills are currently yielding 5.6%. Your brother-in-law, a broker at Safe and Sound Securities, has given
You read in The Wall Street Journal that 30-day T-bills are currently yielding 5.6%. Your brother-in-law, a broker at Safe and Sound Securities, has given you the following estimates of current interest rate premiums:
- Inflation premium = 3.00%
- Liquidity premium = 1.1%
- Maturity risk premium = 2.00%
- 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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Foundations Of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
17th Edition
126001391X, 978-1260013917
