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.
Because of inflationâs impact, the interest rate on a fixed income security can be expressed in two ways. 1  The nominal, or stated, interest rate is the rate of interest on a bond without any adjustment for inflation. 2  The real interest rate on an asset is the nominal rate minus the rate of inflation.