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If the Nominal Rate of Interest Is 10%, the Real

Question 15

Multiple Choice

If the nominal rate of interest is 10%, the real rate of interest is 3%, the default premium is 3%, the liquidity premium is 0.5%, and the maturity premium is 1.5%, then the inflation premium must be ______.


A) 2.0%
B) 2.5%
C) 3.0%
D) none of the above

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