If he were that kind of hands-on manager, this mess might not have happened in the first place.
The real risk-free rate is 4%. 1. The real risk-free rate is 4%. Inflation is expected to be 3% this year and 5% during the next 2 years. Assume that the maturity risk premium is zero.
Step 1. Estimate the risk-free rate (Rf). This is the rate offered on federal government debt which is expected to have no risk of default. Investors can use the yields of bonds issued by the country where the company that issued the stock is domiciled as an estimate of the risk-free rate.