Nico Nelson, a Management Trainee at a Large New York-Based

question 209

Multiple Choice

Nico Nelson, a management trainee at a large New York-based bank, is trying to estimate the real rate of return expected by investors. He notes that the 3-month T-bill currently yields 3 percent and has decided to use the consumer price index as a proxy for expected inflation. What is the estimated real rate of interest if the CPI is currently 2 percent?

• A) 5%
• B) 1%
• C) 3%
• D) 2%

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Definitions:

Truthful

Being honest and not containing or telling any lies.

Superiority Attitude

A mindset or disposition in which an individual believes they are superior to others, often leading to dismissive or derogatory behaviors.

Resentment

A feeling of anger or displeasure about someone or something unfair.

Pros And Cons

The advantages and disadvantages of a specific decision, action, or situation.