Suppose 1-Year T-Bills Currently Yield 7

question 52

Multiple Choice

Suppose 1-year T-bills currently yield 7.00% 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*? The cross-product term should be considered,i.e.,if averaging is required,use the geometric average.

• A)3.68%
• B)3.87%
• C)4.06%
• D)4.26%
• E)4.48%

Assess and correct definitions that violate clarity and precision.

Grasp the significance of context in determining whether a definition is too broad or too narrow.

Analyze the impact of word choice on definition clarity and precision.

Distinguish between metaphorical and literal language in definitions.