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.
This obviously varies enormously. But the U.S. government has generally been thought to pay the ârisk-freeâ rate: 0 percent for risk. The rest of the interest rate is inflation. If money is losing value and you lend it, youâre going to expect to be reimbursed for the loss. Say you and I both expect an inflation rate of 10 percent next year, Denny. I ask to borrow a thousand dollars from you.