During the period of summer internship, person X have been assigned to work with chief financial officer (CFO) of company S incorporation. The CFO decided to assess person X’s understanding of interest rates. Particularly, the CFO asked to provide reasonable forecast of nominal rate of interest for a new issue of AAA rated bonds offered by company S. To determine: The real risk free rate of interest.

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Chapter 2, Problem 2MC

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During the period of summer internship, person X have been assigned to work with chief financial officer (CFO) of company S incorporation. The CFO decided to assess person X’s understanding of interest rates. Particularly, the CFO asked to provide reasonable forecast of nominal rate of interest for a new issue of AAA rated bonds offered by company S.

To determine: The real risk free rate of interest.

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