What is the approximate real interest rate

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Reference no: EM13932733

Suppose that on January 1, 2013 the price of one-year Treasury bill is $970.87. Investors expect the inflation rate to be 2% darning the 2013, but at the end of the year the inflation rate turns out to have been 1%.

1) What is the nominal interest rate on this bill (measured as the yield to maturuty)?

2) What is the approximate real interest rate?

3) What is the exact real interest rate?

Reference no: EM13932733

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