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Inflation is expected to be 3 percent over the next year. You desire an annual real rate of return of 2.5 percent on your investments.

Inflation is expected to be 3 percent over the next year. You desire an annual real rate of return of 2.5 percent on your investments. What market rate of interest would have to be offered on a one-year Treasury security for you to consider making an investment?

1.5 percent

5.5 percent

4.5 percent

0.5 percent

None of the above

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