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You read The Wall Street Journal that 30-day T-bills are currently yielding 5.5%. 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=1.8%

- Default risk premium=2.15%

On the basis of these data, what is the real risk-free rate of return? Show your work.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92792445

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