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    cnapoli's Avatar
    cnapoli Posts: 1, Reputation: 1
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    #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's Avatar
    ArcSine Posts: 969, Reputation: 106
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    #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



    You have r and i, so just solve for n.
    basia5's Avatar
    basia5 Posts: 1, Reputation: 1
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    #3

    Apr 3, 2011, 08:01 PM
    The correct answer is:

    (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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