Can anyone help with those problems please??? I am getting very confused Thanks

Question

Can anyone help with those problems please???

I am getting very confused

Thanks

You read in the Wall Street Journal that 30-day T-bills are currently yielding 5.5%. You brother-in-law, a broker at Safe and Sound Securities, has given you the following estimates of current interest rate premiums.

Inflation Premium = 3.25%

Liquidity Premium = 0.6%

Maturity Risk Premium = 1.8%

Default Risk Premium = 2.15%

On the basis of these data, what is the real risk-free rate of return?

2.) The real risk-free rate is 3%. Inflation is expected to be 2% this year, 4% during the next two years. Assume that the maturity risk premium is zero. What is the yield on 2-year Treasury securities? What is the yield on 3-year Treasury securities?

3.) Callaghan Motors

Explanation / Answer

answer is :

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