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Joanna Williams Purchased a One-Year Treasury Bill at $100

question 58

Short Answer

Joanna Williams purchased a one-year Treasury bill at $100. This bond does not have any coupon payment, but Joanna will get $105 at maturity. The inflation rate in a year's time is expected to be 1.3%.
A) What is the income yield from this investment?
B) What is the nominal rate of return from this investment?
C) What is the real rate of return from this investment?


Definitions:

Specific Performance

A legal remedy requiring a party to perform their specific duties under a contract, rather than paying damages.

Letter Offering

A letter offering is a formal document or communication extending an offer, such as employment or the purchase of real estate, to someone, detailing the terms of the offer and next steps for acceptance.

Book Collection

An accumulation of books gathered for a specific purpose, interest, or theme, often organized and maintained by an individual or institution.

Accident Insurance

A type of insurance policy that provides compensation or coverage for medical expenses resulting from unexpected injuries or accidents.

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