Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Question
Treasury bills are currently paying 6 percent and the inflation rate is 2.8 percent. a. What is the approximate real rate of interest? (Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the exact real rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. a. Approximate real rate b. Exact real rate 3.00% 3.11 %
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Transcribed Image Text:Treasury bills are currently paying 6 percent and the inflation rate is 2.8 percent. a. What is the approximate real rate of interest? (Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the exact real rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. a. Approximate real rate b. Exact real rate 3.00% 3.11 %
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Step 2: Computation of the approximate real rate of return
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Step 3: Computation of the exact real rate
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