Study Session 5, Reading 15, Question 4, Part C
The answer says: “Based on the consensus forecasts for long-term Treasury bonds and inflation shown in Exhibit 4, a discount rate of 6 to 7 percent would be reasonable.”
According to the exhibit, long-term bonds have a consensus forecast of 6% and inflation has a consensus forecast of 3%. Why is the answer 6-7% rather than 9%?
