Question

What are the current level of the prime rate (4.5%), the discount rate (2.00%), and the three-month T-bill rate (1.61%)? Calculate the percentage change in each of these rates since June 2016.

Answer #1

**Prime rate**

Current Level of prime rate = 4.50%

Prime rate in June 2006 = 8.25%

Percentage change in prime rate = (4.50% - 8.25%) / 8.25%

= -45.45%

Percentage change in prime rate from June 2006 to now is -45.45%.

**Discount rate**

Current Level of Discount rate = 2.00%

Discount rate in June 2006 = 6.25%

Percentage change in Discount rate = (2.00% - 6.25%) / 6.25%

= -68%

Percentage change in Discount rate from June 2006 to now is -68%.

**Three-monthT-bill rate**

Current Level of three-monthT-bill rate = 1.61%

Three-monthT-bill rate in June 2006 = 4.79%

Percentage change in three-monthT-bill rate = (1.61% - 4.79%) / 4.79%

= -66.39%

Percentage change in three-monthT-bill rate from June 2006 to now is -66.39%.

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