Problem P6-8
				A.	C.
Security	Inflation Expectation Premium	Real Rate of Interest	Risk Premium	Risk-Free Rate	Nominal Rate of Interest
A	6%	3%	3%
B	9%	3%	2%
C	8%	3%	2%
D	5%	3%	4%
E	11%	3%	1%

Risk-free rate and risk premiums The real rate of interest is currently 3%; the infla- tion expectation and risk premiums for a number of securities follow. PB Inflation expectation Security Premium Risk premium 1 a. Find the risk-free rate of interest, R, that is applicable to each security b. Although not noted, what factor must be the cause of the ditfering risk-free rates found in part a? c. Find the nominal rate of interest for each security