The risk premium for an investment is 3 percent. The inflation premium is 4 percent. If the
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Question:
The risk premium for an investment is 3 percent. The inflation premium is 4 percent. If the pure rate of interest in the market is 3.0 percent, what should be the yield on a risk-free security? Use exact formulation.
A. 8.16%
B. 6.60%
C. 6.08%
D. 9.72%
E. 9.20%
F. 7.64%
G. 8.68%
H. 7.12%
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