Suppose that on january 1 2012 the price of a one-year, Ask an Expert

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Suppose that on January 1, 2012, the price of a one-year Treasury bill is $970.87. Investors expect that the inflation rate will be 2% during 2010, 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 actual real interest rate?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92060085

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