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What is the equilibrium rate of return on a 1 year treasury

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The real risk-free rate is 3.55%, inflation is expected to be 2.55% this year, and the maturity risk premium is zero. Taking account of the cross-product term, i.e., not ignoring it, what is the equilibrium rate of return on a 1-year Treasury bond?

a. 5.595%

b. 5.757%

c. 6.376%

d. 6.191%

e. 5.138%

Reference no: EM131126274

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