What is the implied pure rate of interest

Reference no: EM13295892

Riordan services inc. just issued a 2-year bond at a 15% interest rate. Riordan's default risk premium has been estimated at 2.5%, its liquidity risk premium is about 2%, and its maturity risk premium is 3%. inflation is expected to be 5% in the bond's first year and 3% in its second year. What is the implied pure rate of interest.

Reference no: EM13295892

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