Business, 26.02.2020 02:50 aidanfbussiness

Suppose that on January 1, 2018, the price of a one-year Treasury bill is $970.87. Investors expect that the inflation rate will be 2% during 2018, but at the end of the year, the inflation rate turns out to have been 1%. What are the nominal interest rate on the bill (measured as the yield to maturity), the expected real interest rate, and the real interest rate?

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Suppose that on January 1, 2018, the price of a one-year Treasury bill is $970.87. Investors expect...

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