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    What is the real risk-free rate on a 5-Year Treasury Bond?

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    5-year Treasury bonds yield 5.5%. 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*?

    a. 2.59%
    b. 2.88%
    c. 3.20%
    d. 3.52%
    e. 3.87%

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    https://brainmass.com/business/bond-valuation/real-risk-free-rate-year-treasury-bond-236539

    Solution Preview

    5-year Treasury bonds yield 5.5%. The inflation premium (IP) is 1.9%, and the ...

    Solution Summary

    This solution explains how to determine the real risk-free rate interest rate with a simple formula and calculations.

    $2.19

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