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.
A Riskfree Rate! ï® On a riskfree asset, the actual return is equal to the expected return. Therefore, there is no variance around the expected return.! ï® For an investment to be riskfree, then, it has to have! â¢ No default risk!â¢ No reinvestment risk! 1. Time horizon matters: Thus, the riskfree rates in valuation will depend upon when the cash ï¬ow is expected to occur and will vary across time. ! 2.