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5-Year Treasury Bonds Yield 5

Question 16

Multiple Choice

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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