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Problem 1: The real rate of interest is currently 2%; the inflation expectation and risk premiums for a security are shown below. Inflation expectation premium

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Problem 1: The real rate of interest is currently 2%; the inflation expectation and risk premiums for a security are shown below. Inflation expectation premium Risk premium 5% 4% Find the risk-free rate of interest, RF, that is applicable to the security. Find the nominal rate of interest for the security. b

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