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1. You received 3% APR interest rate from a CD account of Bank of America. By check the internet, you also noticed that the inflation

You received 3% APR interest rate from a CD account of Bank of America. By check

the internet, you also noticed that the inflation rate was 1.2% for the year.

1) What is the real

interest rate you got? What does real interest rate measure?

2) Suppose you got a 12% APR return rate from your stock investments, how

much is the risk premium on the stock investment

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