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Ai Lun, a management trainee at a large New York-based bank, is trying to estimate the real rate of return expected by investors. He notes

Ai Lun, a management trainee at a large New York-based bank, is trying to estimate the real rate of return expected by investors. He notes that the 3-month T-bill currently yields 3 percent, and consumer prices have been rising steadily at a 2% rate for several years. What should Ai Lun's estimate of the real rate be?

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