65.0k views
1 vote
Suppose the real risk-free rate is 2.85% and the future rate of inflation is expected to be constant at 2.10%. What rate of return would you expect on a 1-year Treasury security, assuming the pure expectations theory is valid? Include cross-product terms, i.e., if averaging is required, use the geometric average. (Round your final answer to 2 decimal places.)

a. 5.01% b. 2.85% c. 4.95% d. 2.91% e. 2.16%

User GuiGS
by
8.1k points

1 Answer

6 votes

Answer:Corporations step up their expansion plans and thus increase their demand for capital.

Explanation:

User Adampetrie
by
8.8k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories