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Scorpion4ik [409]
1 year ago
14

If the real risk-free rate is 112 basis points, the maturity risk premium is 177 basis points and the one-year inflation premium

is 263 basis points, what is the nominal risk-free rate
Business
2 answers:
Oksi-84 [34.3K]1 year ago
7 0

The nominal risk-free rate is 2.12%.

<h3>What is the nominal risk-free rate?</h3>
  • The nominal risk-free rate is typically the current yield on a three-month Treasury note, minus the impact of inflation.
  • The real risk-free rate is the return on a three-month Treasury bill less the effect of inflation.
  • The risk-free rate determines the return an investor can expect from an investment over a defined time period.
  • A risk-free rate is derived by deducting the current inflation rate from the total yield of the treasury bond that corresponds to the investment length.

To find the nominal risk-free rate:

Given -

  • Real risk-free Rate = 1.12%  
  • Inflation Rate = 2.63%
  • Nominal risk-free rate = (1+Real risk free Rate)
  • 1 + 1.12 = 2.12%

Therefore, the nominal risk-free rate is 2.12%.

Know more about nominal risk-free rates here:

brainly.com/question/24131282

#SPJ4

Vinil7 [7]1 year ago
5 0

Answer: 2.12%

Explanation:

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