Discuss the expected inflation rate

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Reference no: EM131487925

Question: (Real interest rates: approximation method) Your CFO is considering an investment in Treasury bills. You have been asked for an approximation on real risk-free rate of interest with following data (ignore the cross product between the real rate of interest and the inflation rate): Treasury bills yields are 4% (nominal quoted rate of return) and expected inflation rate is 2% per year.

Reference no: EM131487925

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