Problem 6-9 Calculating Real Rates of Return [LO 4]

If Treasury bills are currently paying 6.35 percent and the inflation rate is 1.6 percent, what is the approximate and the exact real rate of interest? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

Approximate	%
Exact	%

Problem 6-11 Nominal and Real Returns [LO 4]

An investment offers a total return of 13 percent over the coming year. Bill Bernanke thinks the total real return on this investment will be only 8.5 percent.

Required:

What does Bill believe the inflation rate will be over the next year? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Inflation rate

%