Treasury bills are currently paying 6 percent and the inflation rate is 3.10 percent. What is the approximate real rate of interest? (Round your answer to 2 decimal places. (e.g., 32.16) Approximate real rate

Treasury bills are currently paying 6 percent and the inflation rate is 3.10 percent. What is the approximate real rate of interest? (Round your answer to 2 decimal places. (e.g., 32.16) Approximate real rate

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter22: International Financial Management

Section: Chapter Questions

Problem 1P

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Concept explainers

Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.

Question

D4)

Treasury bills are currently paying 6 percent and the inflation rate is 3.10 percent.
What is the approximate real rate of interest? (Round your answer to 2 decimal places.
(e.g., 32.16))
Approximate real
rate

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