Part 1-Treasury bills are currently paying 5 percent and the inflation rate is 2.5 percent. a. What is the approximate r

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Part 1-Treasury bills are currently paying 5 percent and the inflation rate is 2.5 percent. a. What is the approximate r

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Part 1-Treasury bills are currently paying 5 percent and the
inflation rate is 2.5 percent.
a. What is the approximate real rate of interest?
b. What is the exact real rate?
Part 2-Suppose the real rate is 3.8 percent and the inflation
rate is 5.4 percent. What rate would you
expect to see on a Treasury bill?
Part 3-How does interest rate impact both personal and corporate
decision making?
Part 4-How can you tell whether a bond should sell at par,
discount, or premium by looking at coupon
rate and YTM?
Part 5-Differentiate nominal and real interest rates.
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