Which of the following best describes the real risk free rate of interest?
A) the rate of interest on a short-term bond that does not include an inflation premium
B) the rate of interest on a short-term bond that does include an inflation premium
C) the rate of interest on a short-term bond that includes a default risk premium
D) the rate of interest on a long-bond, such as the Government of Canada's 30-year bond
Correct Answer:
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