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%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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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%

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