Ai Lun,a Management Trainee at a Large New York-Based Bank,is

question 111

Multiple Choice

Ai Lun,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 consumer prices have been rising steadily at a 2% rate for several years.What should Ai Lun's estimate of the real rate be?

• A)5%
• B)1%
• C)3%
• D)2%