Exhibit 32 The Annual Rate of Inflation Is 2

question 28

Multiple Choice

Exhibit 3.2.
Use the Information Below for the Following Problem(S)
                                               Real Retums
$\begin{array}{lc}\text { Investment } & \text { Real Returns } \\\hline \text { Large company stock } & \text { Real Annual Return } \\\text { Small capitalization stock } & 6.50 \% \\\text { Long-term corporate bonds } & 8.60 \% \\\text { Long-term government bonds } & 3.60 \% \\\text { U.S. Treasury bills } & 2.80 \% \\\text { 1.03\% }\end{array}$

The annual rate of inflation is 2.5%
-Refer to Exhibit 3.2.What is the long term Treasury bond nominal return?

• A) 3.56%
• B) 5.37%
• C) 6.19%
• D) 9.16%
• E) 11.32%

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