Cross-product between the real rate and inflation

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Reference no: EM131047624

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 4.06% and inflation is expected to be 15.96% each of the next 6 years, what is the yield on a 6-year security with no maturity, default, or liquidity risk?

Reference no: EM131047624

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