The real rate of interest is currently 3%; the inflation expectation and risk premiums for a number of securities follow.
*** Please See Attachment for Table***
a. Find the risk-free rate of interest, RF, that is applicable to each security.
b. Although not noted, what factor must be the cause of the differing risk-free rates found in part a?
c. Find the nominal rate of interest for each security.
This question was asked on Jul 05, 2012 and answered on Jul 06, 2012.
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