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Suppose the real risk-free rate is 2.70% and the future rate of inflation is expected...

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Suppose the real risk-free rate is 2.70% and the future rate of inflation is expected to be constant at 4.70%. What rate of return would you expect on a 1-year Treasury security, assuming the pure expectations theory is valid? Disregard cross-product terms, ie, if averaging is required, use the arithmetic average. a. 3.70% b.5.05% 67.40% O d. 2 83% e. 2.70%

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