cnapoli Posts: 1, Reputation: 1 New Member #1 Apr 12, 2010, 09:41 AM
If real rate is 3% and inflation rate is 4.7% what rate would a treasury bill pay
Financial accounting help. If the real rate is 3% and inflation rate is 4.7% what rate would a treasury bill pay?
 ArcSine Posts: 969, Reputation: 106 Senior Member #2 Apr 12, 2010, 10:34 AM
One arrangement of the relationship between the nominal rate n, the expected inflation rate i, and the real rate r, is given by

$(1+r)\ =\ \frac{1+n}{1+i}$

You have r and i, so just solve for n.
 basia5 Posts: 1, Reputation: 1 New Member #3 Apr 3, 2011, 08:01 PM

(1+R)=(1+r) x (1+h) where h is inflation
(1+R)=(1.03) x (1.047)
R= 0.0784=7.84%

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