The real risk-free rate is 3.15%, inflation is expected to be 6.25% this year, and...
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The real risk-free rate is 3.15%, inflation is expected to be 6.25% this year, and the maturity risk premium is zero. Ignoring any cross-product terms, i.e., if averaging is required, use the arithmetic average, what is the equilibrium rate of return on a 1-year Treasury bond?
a. 3.35%
b. 4.70%
c. 9.40%
d. 3.15%
e. 7.83%
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