Nick is a product manager in an investment banking firm. His supervisor asked him to price an

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Nick is a product manager in an investment banking firm. His supervisor asked him to price an investment product, so Nick conducted some research and the market information he obtained is as follows: The rate of return of 3-month Treasury bills is 6%, the expected inflation rate is 3%, and the risk premium of an investment product with similar characteristics in the market is 5%. What should be the nominal rate of return of Nick’s investment product?

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Principles Of Managerial Finance

ISBN: 9781292018201

14th Global Edition

Authors: Lawrence J. Gitman, Chad J. Zutter

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