Question: Suppose you have $ 2 , 2 0 0 and plan to purchase a 1 0 - year certificate of deposit ( CD ) that

Suppose you have $2,200 and plan to purchase a 10-year certificate of deposit (CD) that pays 13.9% interest, compounded annually. How much will you have when the CD matures?
a. $2,505.80
b. $8,084.63
c. $9,826.33
d. $7,098.00
e. $8,434.09
Suppose the real risk-free rate is 4.00% and the future rate of inflation is expected to be constant at 3.10%. What rate of return would you expect on a 1-year Treasury security, assuming the pure expectations theory is valid? Include cross-product terms, i.e., if averaging is required, use the geometric average. (Round your final answer to 2 decimal places.)
a.3.22%
b.7.22%
c.4.00%
d.7.10%
e.4.12%

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