An analyst is evaluating securities in developing nation

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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. A 6-year security with no maturity, default, or liquidity risk has a yield of 21.95%. If the real risk-free rate is 7%, what average rate of inflation is expected in this country over the next 6 years? Round your answer to two decimal places.

Reference no: EM13873582

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