During the period 1990 to 2014, the average yield on 3-month U.S. Trea
During the period 1990 to 2014, the average yield on 3-month U.S. Treasury bills was 3.04%, the
average inflation rate was 2.64%,
the average yield on 30-year Treasury bonds was 5.49%, and the
average return on 30-year Aaa-rated corporate bonds was 6.35%. The real risk-free short-term
interest rate is
A) 2.13%. B) 2.97%. C) 0.40%. D) 4.76%.
ANSWER
C
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