During the period 1987 to 2011,the average yield on 3-Month U.S.Treasury bills was 3.85%,the average inflation rate was 2.92%,the average yield on 30-year Treasury bonds was 6.14%,and the average return on 30-year AAA-Rated Corporate Bonds was 7.00%.The real risk-free short-term interest rate is

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The real risk-free short-term interest rate is calculated by subtracting the average inflation rate from the average yield on 3-Month U.S. Treasury bills: 3.85% - 2.92% = 0.93%, which is approximately 0.90%.

During the Period 1987 to 2011,the Average Yield on 3-Month