The Real Risk-Free Rate Is 3

question 6

Multiple Choice

The real risk-free rate is 3.55%,inflation is expected to be 2.85% this year,and the maturity risk premium is zero.Taking account of the cross-product term,i.e. ,not ignoring it,what is the equilibrium rate of return on a 1-year Treasury bond? (Round your final answer to 3 decimal places. )

• A) 6.111%
• B) 6.566%
• C) 7.216%
• D) 6.501%
• E) 5.331%

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Definitions:

Marriage

A legally or formally recognized union of two people as partners in a personal relationship.

Opinions

Personal beliefs or judgments that are not necessarily based on fact or knowledge.

Null Hypothesis

A statistical hypothesis that assumes no significant difference or effect exists between certain datasets or conditions.

Independent Variable

A variable in an experiment that is manipulated to observe its effect on the dependent variable.