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The CFO of your firm has asked you for an approximate answer to this problem:

What was the increase in real purchasing power associated with both 3-month Treasury bills and 30-year Treasury bonds?

Assume that the current 3-month Treasury bill rate is 4.34 percent, the 30-year Treasury bond rate is 7.33 percent, and the inflation rate is 2.78 percent. Also, the chief financial officer wants a short explanation should the 3-month real rate turn out to be less than the 30-year real rate.

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  • Category:- Basic Finance
  • Reference No.:- M947361

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