Corporate Finance Assignment/ Professional Essay Writers
May 7th, 2020
An analyst is evaluating securities in a developing nation where the inflation rate is very high. As a result, the analyst has been warned not to ignore the cross-product between the real rate and inflation. If the real risk-free rate is 3% and inflation is expected to be 8% each of the next 4 years.
What is the yield on 4-year security with no maturity, default, or liquidity risk? (Hint: Refer to “The Links Between Expected Inflation and Interest Rates: A Closer Look”.) Round your answer to two decimal places. Get Finance Help Today