Input
Output
Evaluation Input Image

A recent study of inflationary expectations has revealed that the consensus among economic forecasters yields the following average annual rates of inflation expected over the periods noted. (Note: Assume that the risk that future interest rate movements will affect longer maturities more than shorter maturities is zero; that is, assume that there is no maturity risk.) <image 1> If the real rate of interest is currently 2.5%, find the nominal rate of interest on the following U.S. Treasury issues: 5-year bond



(A) 7.5%


(B) 8.5%


(C) 10.5%


(D) 11.5%


Answer with the option's letter from the given choices directly. No punctuation.


B


Expected Answer: C

Difficulty: Easy

Subfield: Managerial Finance

Evaluation

Evaluation ID
b8f06f42-0406-4eb5-ad3f-dd47381d1d82
Created
February 21, 2024
Raw Output
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