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VersienA F1N350; 113 Fin 350 Business Finance Quizl NAMES: SECTION: Due Date: April 11, 2011 Answer All Questinns. Read all the answers carefully and select
VersienA F1N350; 113 Fin 350 Business Finance Quizl NAMES: SECTION: Due Date: April 11, 2011 Answer All Questinns. Read all the answers carefully and select the best answer for each question. 1. A 30-day ThiJl is merely yielding 5.5%. The following information is available: ination premium = 3.50%, liquidity premium = 0.6%, manning risk premium = 1.3% and default risk premium = 2.155% [In the basis of these data, the nominal riskee rate is and the real riskfree rate is a) 5.5%; 1.9% 1:.) 5.5%; 2.5% c) 1.5%; 5.0% d) 0.5%; 0.1% B) 2.5%; 5.5% Suppose the rate ofreturn on a 10-year Thend is currently 5.00% and that on a 10-year Treasury Ination Pretected Securit {TIP} is 2.10%. Supp-use further that the WP on a 10year Th-end is 0.9%; that no IMRP is required on TIE's; and that no liquidity premiums are required on an]; Tbends. Given this data; what is the expected rate of ination ever the next 10 yea: a) 2.30% h) 1.90% c) 2.10% d) 2.00% e) 2.20%
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