You Are Given the Following Data: Assume That a Highly

question 32

Multiple Choice

You are given the following data: Assume that a highly liquid market does not exist for long-term T-bonds, and the expected rate of inflation is a constant.Given these conditions, the nominal risk-free rate for T-bills is __________, and the rate on long-term Treasury bonds is __________.

• A) 4%; 14%
• B) 4%; 15%
• C) 11%; 14%
• D) 11%; 15%
• E) 11%; 17%

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Definitions:

Ace of Spades

A playing card with a single spade symbol on it, often considered the highest card in many card games.

King of Spades

A playing card in a standard deck of 52 cards, often associated with certain games or symbolic meanings.

Independent

Not influenced or controlled by others; in statistics, it refers to variables that are not related to each other.

Standard Deviations

A measure that quantifies the amount of variation or dispersion of a set of data values from the mean.