Suppose the real risk-free rate is 3.00%, the average expected future inflation rate is 2.60%, and a maturity risk premium of 0.10% per year to maturity applies, i. e., MRP = 0.10%(t), where t is the years to maturity. What rate of return would you expect on a 1-year Treasury security, assuming the pure expectations theory is NOT valid? Disregard cross-product terms, i. e., if averaging is required, use the arithmetic average.

5.70%

Explanation:

Given that

Real risk free rate = 3%

Expected future inflation rate = 2.60%

Maturity risk premium = 0.10%

So, by considering the above information , the rate of return expected would be

= Real risk free rate + Expected future inflation rate + Maturity risk premium

= 3% + 2.60% + 0.10%

= 5.70%

We simply added the above three items so that the expected return could come

c.

explanation:

regressive tax taxes the poor and less of the wealthy. this the rich get richer and the poor get more poor. this would create a large wealth gap.

income statement is prepared in order to show the profits and loss of a business. in order to prepare the income statement she should collect all the income and expenses of the product with the cost of production.