kasinkei

acer Wrote:
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> You should be using 15.12, you have to use nominal
> risk free rate and not just risk free rate.
> Clearly mentioned in Schweser.

If a rate is not clearly labeled as REAL, you can assume its a nominal rate. the inflation rate is there to confuse you. the 3% inflation is already included in the 4% (If we assume the 4% is nominal).

We all know to use the nominal rate...the real question is, if a RFR is not clearly labeled as REAL or NOMINAL, which should we assume it is? Schweser says assume its nominal unless CLEARLY stated as REAL.

Damil - whats the answer? the wording is unclear on this one



Edited 1 time(s). Last edit at Friday, June 5, 2009 at 10:42AM by june2009.