Multiple Choice
Suppose 1-year T-bills currently yield 7.00% and the future inflation rate is expected to be constant at 3.20% per year.What is the real risk-free rate of return,r*? The cross-product term should be considered,i.e.,if averaging is required,use the geometric average.
A) 3.68%
B) 3.87%
C) 4.06%
D) 4.26%
E) 4.48%
Correct Answer:
Verified
Correct Answer:
Verified
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