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Find what is the real risk-free rate

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Problem 1: 5-year Treasury bonds yield 4.8%. The inflation premium (IP) is 1.9%, and the maturity risk premium (MRP) on 5-year bonds is 0.4%. What is the real risk-free rate, r*?

Select the correct answer.

a. 2.74%

b. 2.50%

c. 3.22%

d. 2.26%

e. 2.98%

Reference no: EM132954289

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