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Suppose the real risk-free rate is 4.45% and the future rate of inflation is expected to be constant at 3.90%. What rate of return
Suppose the real risk-free rate is 4.45% and the future rate of inflation is expected to be constant at 3.90%. What rate of return would you expect on a 1-year Treasury security, assuming the pure expectations theory is valid? Include cross-product terms, i.e., if averaging is required, use the geometric average. (Round your final answer to 2 decimal places.) O a. 4.07% O b. 8.52% O c. 4.45% O d. 8.35% O e. 4.62%
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