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Sagot :
The rate we would expect to see on a treasury bill is 7.74%.
What is a treasury bill?
Treasury bills (also known as T-bills) have been short-term securities which mature with one year less than from the date they are issued. T-bills are purchased for less than or equal to their face value, and then when they mature, the Treasury pays the face value.
Now, as per the given question;
The current real rate is 3.0 percent.
The current inflation rate is 4.6 percent.
The fishers equation must be used to calculate the expected interest rate on a treasury bill.
1 + R = (1 + r)(1 + h)
As a result, the treasury bill rate can be estimated as follows:
1 + R = (1 + r)(1 + h)
The current real rate r = 3.0%
= 3.0/100
= 0.03
The h current inflation rate = 4.6%
= 4.6/100
= 0.046
Substituting the values in the formula;
R = (1 + r)(1 + h) - 1
= (1 + 0.03)(1 + 0.046)-1
= (1.03 × 1.046)-1
= 1.07738-1
= 0.07738×100
= 7.738%
R = 7.74%
Therefore, the expect treasury bill is estimated as 7.74%.
To know more about the treasury bill, here
https://brainly.com/question/13095860
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