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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. A 6-year security with no maturity, default, or liquidity risk has a yield of 14.1%. If the real risk-free rate is 6.75%, what average rate of inflation is expected in this country over the next 6 years? Do not round intermediate calculations. Round your answer to two decimal places.

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Financial Management, Finance

Category:- Financial Management
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