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Determine the real risk-free rate of return

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You read in The Wall Street Journal that 30-day T-bills currently are yielding 6 percent. Your brother-in-law, a broker at Kyoto Securities, has given you the following estimates of current interest rate premiums:

Liquidity premium 3% Inflation premium 2.5% Maturity risk premium 1% Default risk premium 2% Based on these data, what is the real risk-free rate of return?

Reference no: EM132068382

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