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What is the nominal interest rate

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Suppose that the current 3-month Treasury bill rate is 3% and the inflation rate is 2%. The 30-year Treasury bond rate is 5% and the 30-year corporate bond rate is 8%. Assuming that the liquidity-risk premium is estimated at 3 basis points. What is the nominal interest rate? (Hint: Nominal interest rate = Real risk-free interest rate + Inflation premium + Default-risk premium + Maturity-risk premium + Liquidity-risk premium)

Reference no: EM132705897

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