An analyst is evaluating securities in a developing nation


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 3.48% and inflation is expected to be 15.83% each of the next 7 years, what is the yield on a 7-year security with no maturity, default or liquidity risk? State your answer as a percent to 2 decimal places.

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Financial Management: An analyst is evaluating securities in a developing nation
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