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If You Expect the Inflation Premium to Be 2%, the Default

Question 112

Multiple Choice

If you expect the inflation premium to be 2%, the default risk premium to be 1% and the real interest rate to be 4%, what interest would you expect to observe in the marketplace under the simplest form of market interest rates?


A) 1%
B) 2%
C) 5%
D) 7%

Correct Answer:

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