You are trying to forecast the expected level of the aggregate Toronto stock market for the next year. Suppose the current three- month Treasury bill rate is 4 percent, the yield to maturity on 10 + - year Canada bonds is 5 percent per year, the expected rate of inflation is 2 percent per year, and the expected EPS for the S& P/ TSX Composite is $ 450. What is your forecast, and why?
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