Question: Inflation Cross-Product An analyst is evaluating securities in a developing nation where the inflation rate is very high. As a result, the analyst has been

Inflation Cross-Product

An analyst is evaluating securities in a developing nation where the inflation rate is very high. As a result, the analyst has been warned not to ignore the cross-product between the real rate and inflation. If the real risk-free rate is 3% and inflation is expected to be 10% each of the next 4 years, what is the yield on a 4-year security with no maturity, default, or liquidity risk? Round your answer to two decimal places.

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