The real rate of interest and the inflation rate

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Reference no: EM13970925

You are considering investing money in Treasury bills and wondering what the real risk-free rate of interest is. Currently, Treasury bills are yielding 4.5% and the future inflation rate is expected to be 2.1% per year. Ignoring the cross product between the real rate of interest and the inflation rate, what is the real risk-free rate of interest?

Hint: real rate of return = normal rate of return - inflation rate

Reference no: EM13970925

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