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A commentator on the financial markets notes that interest rates are steady at 5%, inflation has been 1.5% and you anticipate inflation rising to 2.25%.

A commentator on the financial markets notes that interest rates are steady at 5%, inflation has been 1.5% and you anticipate inflation rising to 2.25%. Given this, the real rate of return is closest to:

A.

6.50%.

B.

3.50%.

C.

2.75%.

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