Ask Question
17 August, 22:39

The real risk-free rate is 3%, and inflation is expected to be 3% for the next 2 years. A 2-year Treasury security yields 6.2%. What is the maturity risk premium for the 2-year security

+4
Answers (1)
  1. 17 August, 23:53
    0
    0.2%

    Explanation:

    The real risk-free rate is 3%, and inflation is expected to be 3% for the next 2 years; so the risk-free rate is 6%.

    The maturity risk premium is the different between return on investment and same tenor investment

    = Treasury security yields 6.2% - risk free rate 6%

    = 6.2% - 6% = 0.2%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “The real risk-free rate is 3%, and inflation is expected to be 3% for the next 2 years. A 2-year Treasury security yields 6.2%. What is the ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers