Question
The following premiums apply to an 8-month bond: interest rate risk premium = 0.32 percent; liquidity premium = 0.44 percent; default premium = 1.15 percent;
The following premiums apply to an 8-month bond: interest rate risk premium = 0.32 percent; liquidity premium = 0.44 percent; default premium = 1.15 percent; inflation premium = 2.44 percent; real rate = 3.20 percent. What is the expected nominal interest rate on an 8- month risky security given these values?
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Step: 1
The expected nominal interest rate on an 8month risky security can be calculated as the sum ...
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Principles of Finance
Authors: Scott Besley, Eugene F. Brigham
6th edition
9781305178045, 1285429648, 1305178041, 978-1285429649
