What is real risk-free rate of return

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Reference no: EM131549160

You read in The Wall Street Journal that 30-day T-bills are currently yielding 4.1%. Your brother-in-law, a broker at Safe and Sound Securities, has given you the following estimates of current interest rate premiums:

Inflation premium = 2.5%

Liquidity premium = 0.8%

Maturity risk premium = 1.55%

Default risk premium = 2.75%

On the basis of these data, what is the real risk-free rate of return? Round your answer to two decimal places.

EDIT: Nevermind, I figured it out. It's 1.6%

4.1% - 2.5% = 1.6%

Reference no: EM131549160

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