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QUESTION Assume that expected rates of inflation over the next 5 years are 3 percent, 3 percent, 4 percent, 5 percent, and 5 percent, respectively.
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Assume that expected rates of inflation over the next 5 years are 3 percent, 3 percent, 4 percent, 5 percent, and 5 percent, respectively. What is the expected rate of a 5-year Treasury note if the real risk-free rate is 1% and all other risk premiums are zero?
| a. | 5.0% |
| b. | 4.0% |
| c. | 4.2% |
| d. | 4.5% |
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Personal Finance
Authors: E. Thomas Garman, Raymond E. Forgue, Jonathan Fox
14th Edition
