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You can buy a Treasury-bill for $98.75, and in three months the T-bill pays you $100....

You can buy a Treasury-bill for $98.75, and in three months the T-bill pays you $100.

What is the 3-month Nominal Risk Free Rate?

Express your answer as a percentage, for example 3.18% should be entered as 3.18 without the percentage sign.

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Answer #1

Yield = [Face Value - Price] / Price

= [$100 - $98.75] / $98.75 = $1.25 / $98.75 = 0.0127, or 1.27%

So, 3-month rate = 1.27%

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