Tuesday February 27, 2007

1. The real risk-free rate is 4 percent. Inflation is expected to be 4 percent this year, 6 percent next year, and then 5 percent thereafter. The maturity risk premium is estimated to be 0.06 X (t-1)%, where t = number of years to maturity. What is the yield on a 7-year Treasury note… ................
................