Question: need to learn how to solve using nominal rate, pure rate, inflation rate, risk premium 7. (Using the Fisher model) The rate of interest avail-

need to learn how to solve using nominal rate, pure rate,

need to learn how to solve using nominal rate, pure rate, inflation rate, risk premium

7. (Using the Fisher model) The rate of interest avail- able on a certain security is 14%. If the pure rate of interest is 3.25%, what risk premium do investors de- mand if they require an inflation premium of: a. 2%? b. 4%? C. 670? d. 8%? 2

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