Suppose the Real Risk Free Rate of Interest Is 4

question 26

Multiple Choice

Suppose the real risk free rate of interest is 4%, maturity risk premium is 2%, inflation premium is 6%, the default risk on similar debt is 3%, and the liquidity premium is 2%. What is the nominal interest rate on this venture's debt capital?

• A) 13%
• B) 14%
• C) 15%
• D) 16%
• E) 17%

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