If inflation is expected to be 05 percent what is the


1. A one-year U.S. Treasury security has a market interest rate of 2.25 percent. If the expected real rate of interest is 1.5 percent, what is the expected annual inflation rate?

2. You wish to have $6,000 in 9 years, how much do you need to deposit today into an account paying 5% compounded annually?

3. Assume investors expect a 2.0 percent real rate of return over the next year. If inflation is expected to be 0.5 percent what is the expected market interest rate for a one-year U.S. Treasury security?

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Financial Management: If inflation is expected to be 05 percent what is the
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