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SOLVED: Suppose the real risk-free rate is 3.50% and the future rate of inflation is expected to be constant at 5.00%. 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.) Oa.7.11% b.10.67% c.10.41% Od.9.89% O e.8.67%
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