Question

Assume that over the past 88 years, u. S. Treasury bills had an average return of 3. 5 percent as compared to 6. 1 percent on long-term government bonds. During this same time period, assume inflation averaged 3. 0 percent. What was the average nominal risk premium on the long-term government bonds?.

Answer 1

Nominal Rate = Real Rate of Return + Inflation + Risk Premium

Nominal Risk Premium on Long Term Govt. Bond = 6.1 - 3.5 = 2.6%

The nominal hobby price (or cash interest charge) is the percentage increase in cash you pay the lender for the usage of the cash you borrowed.

The nominal hobby price is often used in banks to explain interest on exceptional loans and inside the funding field. as an instance, if the nominal charge on a loan is five%, you can expect to pay $50 of a hobby for $1,000 borrowed. at the year's give up, you may pay $1,050.

An actual interest charge is adjusted to dispose of the results of inflation and gives the actual rate of a bond or loan. A nominal interest fee refers to the interest fee earlier than taking inflation under consideration.

Learn more about nominal rate  here:

https://brainly.com/question/25816355

#SPJ4