ect a 5-year bond to pay as of today? P6-8 Risk-free rate and risk premiums The real rate of interest is currently 3 %; the infla- tion expectation and risk premiums for a number of securities follow. LG 1 Inflation expectation Security Premium Risk premium A 3% 2 2 5 4 11 1 a) Find the risk-free rate of interest, Rp, 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? e Find the nominal rate of interest for each security. BCD E