Welcome to Westonci.ca, where your questions are met with accurate answers from a community of experts and enthusiasts. Get immediate and reliable answers to your questions from a community of experienced professionals on our platform. Join our platform to connect with experts ready to provide precise answers to your questions in different areas.
Sagot :
The rate we would expect to see on a treasury bill is 7.74%.
What is a treasury bill?
Treasury bills (also known as T-bills) have been short-term securities which mature with one year less than from the date they are issued. T-bills are purchased for less than or equal to their face value, and then when they mature, the Treasury pays the face value.
Now, as per the given question;
The current real rate is 3.0 percent.
The current inflation rate is 4.6 percent.
The fishers equation must be used to calculate the expected interest rate on a treasury bill.
1 + R = (1 + r)(1 + h)
As a result, the treasury bill rate can be estimated as follows:
1 + R = (1 + r)(1 + h)
The current real rate r = 3.0%
= 3.0/100
= 0.03
The h current inflation rate = 4.6%
= 4.6/100
= 0.046
Substituting the values in the formula;
R = (1 + r)(1 + h) - 1
= (1 + 0.03)(1 + 0.046)-1
= (1.03 × 1.046)-1
= 1.07738-1
= 0.07738×100
= 7.738%
R = 7.74%
Therefore, the expect treasury bill is estimated as 7.74%.
To know more about the treasury bill, here
https://brainly.com/question/13095860
#SPJ4
We appreciate your time. Please come back anytime for the latest information and answers to your questions. We appreciate your time. Please come back anytime for the latest information and answers to your questions. Westonci.ca is your go-to source for reliable answers. Return soon for more expert insights.
