Question: Suppose the inflation rate in Canada as measured by the

Suppose the inflation rate in Canada, as measured by the CPI, has been averaging 3.5 percent in recent years. The most recent Bank of Canada announcement indicates that it expects 3-percent inflation over the next year. If the real rate of return on Canadian T-bills is 1.5 percent, what is the nominal risk-free rate?

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  • CreatedFebruary 25, 2015
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