What is the long-term expected inflation rate

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The expected return on a share of ExxonMobil stock in the U.S. is 14.6% while the expected return on a share of Royal Dutch Shell stock is 12.2% in the Netherlands. If the pure rate of return is 2% in both countries and the required risk premium is 5% for each company's stock, what is the long-term expected inflation rate in each country if the multiplicative form of the Fisher model is used?

Reference no: EM131973586

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