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need to learn how to solve using nominal rate, pure rate, inflation rate, risk premium 7. (Using the Fisher model) The rate of interest avail-

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need to learn how to solve using nominal rate, pure rate, inflation rate, risk premium

7. (Using the Fisher model) The rate of interest avail- able on a certain security is 14%. If the pure rate of interest is 3.25%, what risk premium do investors de- mand if they require an inflation premium of: a. 2%? b. 4%? C. 670? d. 8%? 2

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