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19. Suppose the real risk-free rate is 3.50% and the future rate of inflation is expected to be constant at 4.80%, what rate of return
19. Suppose the real risk-free rate is 3.50% and the future rate of inflation is expected to be constant at 4.80%, what rate of return would you expect on a 1-year Treasury security, assuming the pure expectations theory is valid? Disregard cross-product terms, i.e., if averaging is required, use arithmetic average. a. 8.38% b. 9.79% c. 8.80% d. 8.30% e. 9.38%
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