In June 2014, the nominal interest rate on a one-year Treasury bill was 0.10 percent. From June
Question:
In June 2014, the nominal interest rate on a one-year Treasury bill was 0.10 percent. From June 2014 to June 2015, the consumer price index rose from 237.3 to 237.8. If you bought the one-year Treasury bill in May 2014, calculate the real interest rate you earned over the following 12-month period. Given the results of your calculation, why were investors willing to buy Treasury bills in May 2014?
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