The Real Rate of Interest Is Expected to Be 3

question 107

Multiple Choice

The real rate of interest is expected to be 3 percent and the expected rate of inflation for next year is expected to be 5.5 percent.If the default risk premium is 1.1 percentage points, and the seniority risk premium is 0.4 percentage points, what is the required return on a 1 year U.S.Treasury security?

• A)9.6%
• B)10.0%
• C)8.5%
• D)8.9%

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Definitions:

Punishment

The imposition of a penalty as a response to an undesired behavior, intended to decrease that behavior's occurrence.

Ridiculed

Subjected to mocking laughter or scorn, often aimed at belittling or demeaning someone or something.

Style of Shirt

The specific design, cut, or fashion that characterizes a shirt, which can vary in terms of collar type, sleeve length, material, and other features.

Negative Reinforcement

A form of operant conditioning that occurs when a response is strengthened as a result of stopping or avoiding a negative outcome.