# What is the yield on a 7-year Treasury note?

The real risk-free rate is 2.5 percent. Inflation is expected to be 2 percent this year, 2.5 percent next year, and 3 percent thereafter. The maturity risk premium is estimated to be 0.07 ´ (t - 1)%, where t is the number of years to maturity. What is the yield on a 7-year Treasury note?

a. 0.49%

b. 5.71%

c. 4.92%

d. 5.29%

e. 5.92%

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#### Solution Summary

The expert determines what is the yield on a 7-year treasury note.

$2.19