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Assume that the risk-free interest rate now is 2%, the financial risk premium on 20-year AA corporate bonds now is 4%, and inflation rate is

Assume that the risk-free interest rate now is 2%, the financial risk premium on 20-year AA corporate bonds now is 4%, and inflation rate is expected to remain at 6%, which of the following would be closest to the expected yield on 20-year AA corporate debt ? Please briefly explain your answer.

A. 2%

B. 4%

C. 6%

D. 12%

E. Others:_____

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