Evaluating securities in a developing nation

Reference no: EM131933038

Question: 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 3% and inflation is expected to be 16% each of the next 4 years, what is the yield on a 4-year security with no maturity, default, or liquidity risk? (Hint: Refer to ) Round your answer to two decimal places.

Reference no: EM131933038

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