Exhibit 1-7 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

Exhibit 1-7
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
Consider the following information
Nominal annual return on Canadian T-bills for year 2009 = 3.5%
Nominal annual return on Canadian corporate bonds for year 2009= 4.75%
Nominal annual return on Canadian large-cap stocks for year 2009 = 8.75%
Consumer price index January 1, 2009 = 165
Consumer price index December 31, 2009 = 169
-Refer to Exhibit 1-7. Calculate the real rate of return for Canadian corporate bonds.

A) 3.06%
B) 2.27%
C) 2.51%
D) 3.5%
E) None of the above