Question
You read in The Wall Street Journal that 30-day T-bills are currently yielding 5.9%. 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 5.9%. 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 = 0.2%
- Maturity risk premium = 1.40%
- Default risk premium = 2.75%
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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Mathematics Of Finance
Authors: Robert Brown, Steve Kopp, Petr Zima
8th Edition
0070876460, 978-0070876460
