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Finance quiz 15 2

# Finance quiz 15 2 - Q 3.37 E 5.58 3.43 F 5.62 C 3.55 G 5.75...

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Unformatted text preview: Q. 3.37% E. 5.58% . 3.43% F. 5.62% C. 3.55% G. 5.75% D. 3.61% H. 5.86% The real rate of interest (R) is equal to 2.5% and will stay at this level for all future years. The nominal rate of interest (r) and the interest rate risk premium (IR) on one—, two-, three-, and four-year zero coupon bonds are listed below. What is the expected inﬂation rate for year four (h4)? As in class, assume that the nominal interest rate is equal to the real interest rate plus the inﬂation premium plus the interest rate risk premium. Ignore other premiums. [/4 C37 31% Z : i 0!? 57! a; [r «em‘ °4 m i; r. J .1? I .., ( r1= 8.68125%, 1R1 = 0.80% 1.: 23 "L5 ' if}: .1 r2=9.15765%,IR2:1.00% .. my r3=8.99251%,IR3= 1.15% 2 7.51"“, 3 L1 2 "r: r4=8.63289%,IR4=1.25% ' 7, <1“ . 1 V A. 3.37% E. 5.58% B. 343% F. 5.62% c. 3.55% G. 5.75% D. 3.61% H. 5.86% The real rate of interest (R) is equal to 2.5% and will stay at this level for all future years. The nominal rate of interest (r) and the interest rate risk premium (IR) on one-, two-, three—, and four-year zero coupon bonds are listed below. What is the expected inﬂation rate for year four (h4)? As in class, assume that the nominal interest rate is equal to the real interest rate plus the inﬂation premium plus the interest rate risk premium. Ignore other premlums. r1= 8.68125%, 1R1 = 0.80% r2 = 9.15765%,1RZ = 1.00% . r3 = 8.99251%, 1R3 = 1.15% , 771 WI“ r4 = 8.664035%, 1R4 = 1.25% . 7, .. WU": A. 3.37% E. 5.58% B. 3.43% F. 5.62% ’ G. 5.75% H. 5.86% ...
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