Calculating the real rate of return is an important part ofevaluating an investment's performance. To do this, you need toknow the nominal return on your investment and the rate ofinflation during the corresponding period. To estimate the expectedreal rate of return before you make an investment, you can use thepromised yield and the expected inflation rate.

a.	Go to www.bankrate.com and click onthe CDs and Investments tab.Using Compare CDs & Investment Rates box,find the average one-year CD rate from banks across the nation(these will be nominal rates).
b.	Use the St. Louis Federal Reserve's websiteat research.stlouisfed.org/fred2as a sourcefor data about expected inflation. Search for “MICH inflation,”which will provide you with the University of Michigan InflationExpectation data series (MICH). Click on the ViewData link and find the latest available data point. Whatis the expected inflation rate for the next year?
c.	On the basis of your answers toparts (a) and (b), calculatethe expected real rate of return on a one-year CD investment.
d.	What does the result tell you about real interest rates? Arethey positive or negative, and what does this mean?