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What is the risk premium

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You plan to purchase a car. The dealer is offering special financing at an annual percentage rate (APR) of 10.5 percent for 100 percent of the car value. The inflation premium is 3.5 percent. If the pure rate in the market is 3 percent, what is the risk premium? (Please using the exact, multiplicative formulation for interest rates.)

Reference no: EM132585139

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