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F. Naz
F. Naz, B.Com
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The real risk-free rate is 2.75%, and inflation is expected

Customer Question

The real risk-free rate is 2.75%, and inflation is expected to be 4% for the next 2 years. A 2-year Treasury security yields 8.5%. What is the maturity risk premium for the 2-year security? Round your answer to two decimal places
Submitted: 5 months ago.
Category: Single Problem
Expert:  F. Naz replied 5 months ago.

8.5-2.75-4 = 1.75% is the maturity risk premium.

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