5-year Treasury bonds have a nominal yield of 1.80%. The inflation premium (IP) is 2.09%, and the maturity risk premium (MRP) on 5-year bonds is 1.56%. What is the real risk-free rate, r*? O 5.45% 3.65% O-1.85% 1.85% 3.89%
5-year Treasury bonds have a nominal yield of 1.80%. The inflation premium (IP) is 2.09%, and the maturity risk premium (MRP) on 5-year bonds is 1.56%. What is the real risk-free rate, r*? O 5.45% 3.65% O-1.85% 1.85% 3.89%
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 19P
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![5-year Treasury bonds have a nominal yield of 1.80%. The inflation premium (IP) is 2.09%, and
the maturity risk premium (MRP) on 5-year bonds is 1.56%. What is the real risk-free rate, r*?
O 5.45%
O 3.65%
-1.85%
01.85%
3.89%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F75970fc3-7b68-456d-85d7-65fe6d1e055f%2F47893fec-8551-4753-91c3-a0ed6342d89e%2F85y4bm_processed.jpeg&w=3840&q=75)
Transcribed Image Text:5-year Treasury bonds have a nominal yield of 1.80%. The inflation premium (IP) is 2.09%, and
the maturity risk premium (MRP) on 5-year bonds is 1.56%. What is the real risk-free rate, r*?
O 5.45%
O 3.65%
-1.85%
01.85%
3.89%
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