1. If the 1-year Treasury bill rate on January 17, 2018 is 1.77% and the inflation expectation for the coming year is 1.90%, what is the expected real rate of return for an investor who purchases the 1-year Treasury bill?
Expected Real Rate of Return _______________
2. If an investor desires a real rate of return of 2% and expects inflation to be 2% next year, what nominal rate should the investor demand?
Nominal Rate Investor Demands _______________