Question

Suppose the real rate is 8 percent and the inflation rate is 1.6 percent. What rate would you expect to see on a Treasury bil
QUESTION 2 If expected return is less than required return on an asset, rational investors will A sell the asset, which will
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Answer #1

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T-bill rate (1+Real rate)x(1+Inflation rate)-1 Here, Real rate 8.0% Inflation rate 1.6% 9.73% T-bill rate (1+8%)x(1+1.6%)-1|

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