If the Nominal Rate of Interest Is 11%, the Risk-Free

question 126

Multiple Choice

If the nominal rate of interest is 11%, the risk-free rate of interest is 2%, the default premium is 4%, 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) 3.5%

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