Multiple Choice
5-year Treasury bonds yield 5.5%.The inflation premium (IP) is 1.9%,and the maturity risk premium (MRP) on 5-year T-bonds is 0.4%.There is no liquidity premium on these bonds.What is the real risk-free rate,r*?
A) 2.59%
B) 2.88%
C) 3.20%
D) 3.52%
E) 3.87%
Correct Answer:
Verified
Correct Answer:
Verified
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