Question 13 of 40➤
Suppose the real risk-free rate is 4.35% and the future rate of inflation is expected to be constant at 3.90%. 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.)
O a. 8.42%
Ob. 4.07%
c. 8.25%
Od. 4.52%
e. 4.35%