Question: please show how you arrived at the correct answer. 5. Treasury securities that mature in 10 years currently have an interest rate of 14.9%. Inflation

please show how you arrived at the correct answer. 5. Treasury

please show how you arrived at the correct answer.

5. Treasury securities that mature in 10 years currently have an interest rate of 14.9%. Inflation is expected to be 5% each of the next three years and 6% each year after the third year. The maturity risk premium is estimated to be 0.2%(t-1), where t is equal to the maturity of the bond (i.e., the maturity risk premium of a one-year bond is zero). The real risk-free rate is assumed to be constant over time. What is the real risk-free rate of interest? 13.1 7.4 9.2 7.2

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