Eleanor Burns is attempting to find the nominal rate of interest for each of two securities?A and B?issued by different firms at the same point in time. She has gathered the following data:
a. If the real rate of interest is currently 2%, find the risk-free rate of interest applicable to each security.
b. Find the total risk premium attributable to each security?s issuer and issue characteristics.
c. Calculate the nominal rate of interest for each security. Compare and discuss yourfindings.
This question was answered on: Jul 11, 2017
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