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You read in the Wall Street Journal that three-month Treasury bills currently yield 5.50 percent. Your brother-in-law, a broker at Kyoto Securities, has given you

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You read in the Wall Street Journal that three-month Treasury bills currently yield 5.50 percent. Your brother-in-law, a broker at Kyoto Securities, has given you the following estimates of current interest rate premiums: Inflation risk premium 2.50% Liquidity premium 1.00% Maturity risk premium 2.00% Default risk premium 2.00% Based on these data, the real risk-free rate of return must be (approximately): Your Answer: Answer units Previous Page Next Page Page 11 of 25

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