Chapter 4, Problem 10MC

Summary Introduction

Case summary:

Person SS and Person ST are the vice presidents of M insurance company and also the co-directors for pension and management division of the company. The new clients NM alliance was the company M to make a seminar to the mayors of the cities and person SS and person ST will take the actual presentation. Person X helps them by way of answering their questions.

Characters in the case:

• Person SS
• Person ST
• Person X

To discuss:  Real risk free rate ($\text{r*}$) and nominal interest rate ( ${\text{r}}_{\text{RF}}$) and the securities to be used for estimating these rates.