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Compute the real risk-free rate of return

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Question - You read in The Wall Street Journal that 30-day T-bills are currently yielding 5.8%. Your brother-in-law, a broker at Safe and Sound Securities, has given you the following estimates of current interest rate premiums:

Inflation premium=3.25%

Liquidity premium=0.6%

Maturity risk premium=1.85%

Default risk premium=2.15%

On the basis of these data, Compute the real risk-free rate of return?

Reference no: EM133187277

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