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Risk-free rate and risk premiums The real rate of interest is currently 3%; the inflation expectation and risk premiums for a security are shown below.

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Risk-free rate and risk premiums The real rate of interest is currently 3%; the inflation expectation and risk premiums for a security are shown below. Inflation expectation premium Risk premium 9% 1% a. Find the risk-free rate of interest, Re, that is applicable to the security b. Find the nominal rate of interest for the security

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