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Home > Education > Homework Help > Finance & Accounting   »   Principles of Finance

 
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Old Jan 15, 2006, 04:10 PM
bhaston24
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Principles of Finance

You read in the The Wall Street Journal that 30-day T-bills currently are yielding 8 percent. Your brother-in-law, a broker at Kyoto Securities, has given you the following estimates of current interest rate premiums:
Inflation premium 5%
Liquidity premium 1%
Maturity risk premium 2%
Default risk premium 2%

Based on this data, the real-risk free rate of return is__________________.

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Old Oct 17, 2009, 10:14 AM   #2  
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3%
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Old Oct 17, 2009, 10:15 AM   #3  
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You read in the The Wall Street Journal that 30-day T-bills currently are yielding 8 percent. Your brother-in-law, a broker at Kyoto Securities, has given you the following estimates of current interest rate premiums:
Inflation premium 5%
Liquidity premium 1%
Maturity risk premium 2%
Default risk premium 2%

Based on this data, the real-risk free rate of return is
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Old Oct 17, 2009, 05:06 PM   #4  
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You should always start your own thread for your question instead of tagging onto someone else's, especially a 3 year old thread.

I don't know if you're attempting to ask or to answer, but either way you need to read the guidelines for homework problems that's in red at the top of this forum. We do not just answer people's homework. Attempts to do the problem should always be shown and we can guide from there - or a specific question about what is not understood.

(I don't actually know if the 3% is even correct, because I do mostly accounting, not finance. Just letting you know our policies. I actually thought short-term t-bills were the risk-free rate, but not like I remember much of that class.)
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