If he were that kind of hands-on manager, this mess might not have happened in the first place.
The real risk-free rate is 4%. 1. The real risk-free rate is 4%. Inflation is expected to be 3% this year and 5% during the next 2 years. Assume that the maturity risk premium is zero.
The nominal interest is 12% per year, so the nominal. interest rate per 6 mo is 6%. The effective interest rate. per 6 mo. is also 6% since the compounding period. equals to the interest rate period (6 mo.). Chapter 4 Nominal and Effective Interest. Rates 20.