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What is the real risk free rate

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5-year Treasury bonds yield 6.4%. The inflation premium (IP) is 1.9%, and the maturity risk premium (MRP) on 5-year T-bonds is 0.4%. There is no liquidity premium on these bonds. What is the real risk-free rate, r*?

a. 3.90%

b. 3.77%

c. 5.04%

d. 5.13%

e. 4.10%

Reference no: EM131126286

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