5.? What would be the nominal rate of interest if the real rate if 3%, the inflation premium is 4%, the risk free rate is 7%, the prime is 8%, and all risk factors total 2%?

Selected Answer:

d.? 24%

Response Feedback:

You will NEVER use the Prime in this course, so 8% isn't part of this answer.? The real rate plus the inflation premium, 7% is the same as the risk free rate.? If you added them together (14%) within your answer, you double counted those vairbles