Question: You have determined the following data for a given bond: Real risk-free rate ( r * ) = 3%, the inflation premium = 8%, the

You have determined the following data for a given bond: Real risk-free rate ( r^*) = 3%, the inflation premium = 8%, the default risk premium = 2%, and the maturity risk premium = 1%. What is the interest rate on long-term Treasury securities, or T-bonds,of the relevant maturity? (HINT: There is virtually no risk of default on a US Treasury security and they are traded in active markets which provide the necessary liquidity).

	a.	10%
	b.	11%
	c.	12%
	d.	13%
	e.	14%

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