Jameson decides to ask his neighbor Michael Clay for advice. Clay tells Jameson that since Treasuries and TIPS are both risk- free securities, he should invest in Treasuries because of their greater yield. Convinced by his neighbor, Jameson decides to invest the entire $1 million portfolio in 10- year Treasuries with a yield of 3.0 percent, instead of 10- year TIPS with a yield of 1.2 percent. Identify why Clay’s statement is incorrect with respect to comparing the yields of Treasuries versus TIPS. Calculate the break- even inflation rate at the time of Jameson’s investment. If average inflation over the next 10- years is greater than the break- even inflation rate, which investment will have better performance?