Suppose the real risk-free rate is 2.75% and the future rate of inflation is expected to be constant at 3.50%. What rate

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answerhappygod
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Suppose the real risk-free rate is 2.75% and the future rate of inflation is expected to be constant at 3.50%. What rate

Post by answerhappygod »

Suppose the real risk-free rate is 2.75% and the future rate of
inflation is expected to be constant at 3.50%. What rate of return
would you expect on a 1-year Treasury security, assuming the pure
expectations theory is valid? Include cross-product terms, i.e., if
averaging is required, use the geometric average. (Round your final
answer to 2 decimal places.)
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