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Mathematics, 23.06.2019 02:00 pinkycupcakes3oxbqhx

Tom chooses to invest $10,000 in 10-year, fixed-rate u. s. treasury bonds with a coupon of 2.625 instead of in 10-year tips with a coupon of 1.250. tom expects the inflation rate to be 3% on average over the lives of the bonds. why is his decision to invest in fixed-rate u. s. treasury bonds inconsistent with his expectations of the inflation rate? a. tom's expected inflation means the tips will be more valuable in real terms. b. tom's expected inflation means that the tips will be less likely to default. c. tom should have added 3% to the coupon of the fixed-rate bonds because of inflation. d. tom should have changed the maturity dates of the fixed-rate bonds because of inflation.

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