Suppose one-year T-bills currently yield 7% and the future inflation rate is expected to be constant at 3.20% per year. What is the real risk-free rate of return, r*? Disregard any cross-product terms, i.e., if averaging is required, use the arithmetic average.

Group of answer choices

3.80%

3.99%

4.19%

4.40%

4.62%