The Canadian risk-free rate is 5%. The British risk-free rate is 9%. Expected inflation in Canada is 3%. What is the expected inflation rate in Britain?

Question

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The expected inflation rate in Britain is 7%. This is because the expected inflation rate in Canada is 3%, and the British risk-free rate is 9%. The difference between these two rates is 6%, which is the expected inflation rate in Britain.

The Canadian Risk-Free Rate Is 5