Suppose 1-year T-bills currently yield 7.90% and the future inflation rate is expected to be constant at 5.40% per year. What is the real risk-free rate of return, r"? Disregard any cross-product terms, i.e., if averaging is required, use the arithmetic a average. a. 13.30% b. 2.50% Oc. 8.33% d. 6.65% e. 7.90%
Suppose 1-year T-bills currently yield 7.90% and the future inflation rate is expected to be constant at 5.40% per year. What is the real risk-free rate of return, r"? Disregard any cross-product terms, i.e., if averaging is required, use the arithmetic a average. a. 13.30% b. 2.50% Oc. 8.33% d. 6.65% e. 7.90%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Please answer the correct calculation please ASAP
Don't answer by pen paper

Transcribed Image Text:Suppose 1-year T-bills currently yield 7.90% and the future inflation rate is expected to be constant at 5.40% per year. What is the
real risk-free rate of return, r"? Disregard any cross-product terms, i.e., if averaging is required, use the arithmetic a average.
a. 13.30%
b. 2.50%
Oc. 8.33%
d. 6.65%
e. 7.90%
AI-Generated Solution
Unlock instant AI solutions
Tap the button
to generate a solution
Recommended textbooks for you

Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,



Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,



Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,

Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education