Treasury bills are currently paying 5 percent and the inflation rate is 3.2 percent. a. What is the approximate real rate of interest? (Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the exact real rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Approximate real rate b. Exact real rate % %

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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**Problem 7-12 Calculating Real Rates of Return [LO4]**

Treasury bills are currently paying 5 percent and the inflation rate is 3.2 percent.

a. What is the approximate real rate of interest? *(Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)*

b. What is the exact real rate? *(Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)*

|                           | %   |
|---------------------------|-----|
| a. Approximate real rate  |     |
| b. Exact real rate        |     |

**Explanation of Graphs/Diagrams:**

There are no graphs or diagrams present in this image. It contains a table for entering two calculated percentage values: the approximate real rate and the exact real rate.
Transcribed Image Text:**Problem 7-12 Calculating Real Rates of Return [LO4]** Treasury bills are currently paying 5 percent and the inflation rate is 3.2 percent. a. What is the approximate real rate of interest? *(Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)* b. What is the exact real rate? *(Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)* | | % | |---------------------------|-----| | a. Approximate real rate | | | b. Exact real rate | | **Explanation of Graphs/Diagrams:** There are no graphs or diagrams present in this image. It contains a table for entering two calculated percentage values: the approximate real rate and the exact real rate.
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