P6-8 Risk-free rate and risk premiums
The real rate of interest is currently 3%; the inflation expectation and risk premium for a number of securities follow:
If you want to view the table that is a part of this question please go to the following link and go to page 257: http://homes.ieu.edu.tr/hbaklaci/itf507fall2011/Managerial%20Finance_13e.pdf
a. Find the risk-free rate of interest, RF, that is applicable to each security.
b. Although not noted, what factor must be the cause of the differing risk-free rates found in part a?
c. Find the nominal rate of interest for each security?