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.

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## This question was asked on Jul 05, 2012 and answered on Jul 06, 2012.

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