contestada

The real risk-free rate is 2.85%. Inflation is expected to be 3.85% this year, 4.85% next year, and 2.3% thereafter. The maturity risk premium is estimated to be 0.05 × (t - 1)%, where t = number of years to maturity. What is the yield on a 7-year Treasury note? Do not round intermediate calculations. Round your answer to two decimal places.

Respuesta :

Answer:

The answer is "5.36%".

Explanation:

R = real risk- free rates + premium inflation + risk default premium + premium liquidity + inflation rate maturity

The default risk premium or premium liquidity is 0.

[tex]\text{Real risk-free rate}[/tex] =[tex]2.85 \%[/tex]

[tex]\text{maturity risk premium}[/tex]=[tex]0.05 \times (7-1) \%[/tex]

                                   [tex]= 0.05 \times 0.06 \\\\ = 0.3 \%[/tex]

[tex]\text{Inflation premium}[/tex] [tex]=\frac{(3.85 \%+4.85 \%+5 \times 2.3 \% )}{7}[/tex]

                             [tex]=\frac{(8.70 \%+ 11.5 \% )}{7}\\\\=\frac{(20.20 \% )}{7}\\\\= 2.21 \%[/tex]

[tex]R=2.85 \%+2.21 \% +0+0+0.3 \%[/tex]

   [tex]=5.36\%[/tex]