If inflation were to remain at 1.6% per year, the plain Treasury bond would offer a higher
Question:
If inflation were to remain at 1.6% per year, the plain Treasury bond would offer a higher real rate of return because 1.056/1.016 − 1 ≈ 3.9% per year. But if inflation were to rise in the future, the inflation-adjusted TIPS bond could end up offering the higher rate of return.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Question Posted: