Exhibit 1-5
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $\begin{array}{l}\text {Canadian T-bils } &2.75 \% \\\text {Canadian corporate bonds } &4.75 \%\end{array}$

question 51

Multiple Choice

Exhibit 1-5
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
Assume that during the past year the consumer price index increased by 1.5% percent and the securities listed below returned the following nominal rates of return.
$\begin{array}{l}\text {Canadian T-bils } &2.75 \% \\\text {Canadian corporate bonds } &4.75 \%\end{array}$
-Refer to Exhibit 1-5. If next year the real rates all rise by 10% while inflation climbs from 1.5% to 2.5%, what will be the nominal rate of return on each security?

• A) 1.24% and 1.52%
• B) 1.35% and 3.52%
• C) 3.89% and 6.11%
• D) 3.52% and 3.89%
• E) 1.17% and 6.11%