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The real risk-free rate is 3.05%, inflation is expected to be 2.75% this year, and the maturity risk premium is zero. Ignoring any cross -product terms, what is the equilibrium rate of return on a 1 year Treasury bond?

This question was answered on Jun 24, 2016.Purchase Solution @ 29.44 USD

Solution: Risk Free Rate = 3.05% Inflation Rate = 2.75% Equilibrium Rate of Return (1 Year