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.
If the real interest rate for the year is 1%, the inflation premium is 2%, and the risk premium is 3%, then the actual return for the bond or nominal interest rate will only be 2%, as all of these other factors are costs that degrade the value of the bond.