Which of the following statements regarding the real risk-free rate of interest is correct?
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The real risk-free rate of interest is the interest rate of a riskless security if inflation were expected, and it may be thought of as the rate of interest on long-term Government of Canada T-bonds in an inflation world.
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The real risk-free rate of interest is the interest rate of a riskless security if no inflation were expected, and it may be thought of as the rate of interest on long-term Government of Canada T-bonds in an inflation-free world.
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The real risk-free rate of interest is the interest rate of a riskless security if inflation were expected, and it may be thought of as the rate of interest on short-term Government of Canada T-bills in an inflation world.
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The real risk-free rate of interest is the interest rate of a riskless security if no inflation were expected, and it may be thought of as the rate of interest on short-term Government of Canada T-bills in an inflation-free world.
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