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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?

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spraguer (Moderator)
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